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Developing a sound business strategy

How to develop a strategy that is workable

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Developing a sound business strategy

  1. 1. Developing a sound business strategy (product/service) By Angela Ihunweze Entrepreneurial/marketing consultant CEO of Angela Itambo Company 080 33 28 04 53
  2. 2. Presentation overview  Why is this topic necessary?  What is a strategy?  When is a business strategy considered sound?  Various variables to consider when developing a sound business strategy?  What is SWOT analysis and how can it be done?  Steps towards undertaking a SWOT?  The format for developing a strategy and its challenges?  Implementing the strategy?  When a strategy fails?  Creed for a sound business strategy?
  3. 3. Why is this topic necessary?  The peculiar nature of an SME business; which is characterized with the following:- 1. limited resources e.g. funding, human capital e.t.c 2. High cost of starting and running a business and this is further increased when there isn’t a strategy in place 3. Stiff competition from within and outside 4. Constraints in entry to the marketplace 5. Challenges in acquiring funding  The state of the business terrain particularly in a country such as Nigeria. These and many more makes operating a business especially in a country such as ours challenging and has led to a lot of promising entrepreneurs closing shop. To maneuver in a business environment such as ours it is necessary to be armed with what is necessary to succeed. Your goal as an entrepreneur is to succeed despite the odds. This can only be achieved by developing a sound business strategy and planning along that line
  4. 4. What is a strategy?  The origin of the term The term strategy originated from the battlefield, armies never went into a battle without a strategy. Smaller armies overdrew bigger armies by the careful execution of a strategy, even entering enemy territory, one needed a strategy. The same can be said of business, doing business especially in this era of globalization needs careful maneuvering which can only be got through strategizing.  Its definition; according to the advanced oxford dictionary a strategy is defined as; 1. A plan that is intended to achieve a particular purpose. 2. The process of planning or carrying out a plan in skillful way 3. The skill of planning the movements of armies in a battle or war
  5. 5. Various variables to consider when developing a sound strategy? In developing a sound business strategy certain variables must be considered:-  The business environment of the intended business; this is why a SWOT analysis is needed. This information will give a clear picture of what is on ground and the position you should take either as a pioneer, follower, or a niche. ((This is as mentioned in one of the definitions of a strategy)  The form of your business; there are differences in strategy formulation from a service business to that of a product.  The most ideal option to use as regards the resources at hand. The option to consider will be determined by the outcome of your SWOT exercise.
  6. 6. When is a business strategy considered sound? A business strategy is sound when :-  It is developed based on a careful consideration of what it entails to transact the business  Can be understood by the team involved in the business; even potential stakeholders of the business  It is easy to implement  It is not rigid; can be audited and adjusted when the need arises  It brings the desired results
  7. 7. What is SWOT analysis and how can it be done? What is SWOT analysis? SWOT is defined as ‘to study a particular subject hard, especially with the intention of passing an examination or test or succeeding in a mission. As regards this topic; your aim of undertaking a SWOT is to carefully examine your business from within and outside with the intention of using the information to formulate a game plan for its good. SWOT is also acronym of the following words:-  Strengths; which connotes the inner qualities found in favour of the business; e.g. the managerial competencies, it network strengths, the leadership style  Weakness; hidden foxes that destroy the vine; if not removed can be disastrous.  Opportunities: the above, strengths and weaknesses are internal examination of the managerial competencies of your business. Opportunities and the next acronym are careful examinations of the external business environment which can aid the strategy formulation for the business. Opportunities as the name implies is a period of time when circumstances are right for doing or when a particular situation makes it possible to do or achieve given idea or task .  Threats; connotes possibility of trouble; danger or disaster as regards the opportunities been sort after
  8. 8. Steps towards undertaking a SWOT In undertaking a SWOT analysis you need to imbibe the culture of research, which simply entails a careful study, especially to discover new facts or information about it.  The next step is to have a clear understanding of the form of business you are into and its peculiarities and what managerial competencies are required. In business we have two distinctive forms of business; product which is a tangible business offering in exchange for money. It can be seen, felt, touched to form an opinion whether to use it or not. While we have a service which is can not be seen but is cheaper to start or operate. However these forms of business requires certain managerial skills and environment standards before it can function appropriately.  Once this information is collated, it can now guide you on the bench marks expected during the process.  In defining your strengths, you have to carefully analyze your managerial capabilities, leadership style, business systems to see where you possibly have an edge  The same goes for weakness, owing to the nature of your business it is ideal to detect for possible difficulties that may truncate the plans been executed which can jeopardize the business. As mentioned strengths and weaknesses are within the confines of the business; the next step is to undergo investigation on the following;-  Opportunities that exist in the environment of choice, take note opportunities are circumstances which makes certain business ideas flourish. Wherever there are challenges, there lies opportunities  However not every opportunity should be considered. This is as a result of the threats accrued to it. Many blindly invest in opportunities without uncovering all the possible threats and weighing them to find out if there can handle them It is in undertaking this exercise, you can now choose the most suitable opportunity to explore and formulate a strategy on how to take advantage of this opportunity while maneuvering the possible threats.
  9. 9. The format for developing a strategy and its challenges  Pioneer, you are the first to introduce this business into the market or your business environment, as regards challenges, you should be armed against attacks from competing brands, especially those with bigger budgets. Your action will be on how to fortify your business territory, while expanding to capture more grounds  Challenger; there is a market leader, your business is challenging its dominance in the market place, be sure that the pioneer wouldn’t sit down and wait for you to over through. Be ready to match Naira for Naira . For every action against it there is a reaction.  Niche; you are not out to challenge, rather select an area which may be considered in consequential, however you will be faced by intense competition when it is noticed you are making a success of it Whatever you choose to be, it can only be made possible after a thorough SWOT exercise has been done. Formulating a strategy alongside any of the above, is to enter the market and lay claim to it while warding of potential entries.
  10. 10. Implementing the strategy A strategy becomes sound when it can be translated to actions. To achieve this an entrepreneur must:-  Understand his or her form of business, its peculiarities  Through research, undertake a painstaking SWOT analysis  Based on this, you should decide on how to enter the market, either as a pioneer or challenger or niche, the strengths and weakness exercise will give a true picture of its capabilities, from managerial competence to leadership style  Translating strategy to actions should be done along this criteria:-  Consumer wants, In order to attack, enter the market and lay claim you should ensure your strategy takes into consideration the real wants of the consumer. What the customer expects from your business offering  Consumer costs; In passing the cost to the customer, it should align with the perception of the customer and image you are trying to portray in your business strategy; which fits its idea of the type of product/service that can satisfy his need.  Consumer convenience; the business offering must be easily accessible to the customer  Consumer welfare; must be schooled on what is expected of them as regards maintaining expected standards and in turn be motivated to do so.  Consumer awareness; must not be on a high budget, however what is key is that the right message that encapsulates the strategy is passed on Finally to ensure all these programs are laudable a business plan should be created to capture the essence of the strategy
  11. 11. When a strategy fails  Poor planning and implementation  Failure to adapt to environmental changes  Lack of commitment, from the staff as well as the entrepreneur  Lack of audit from time to time
  12. 12. Creed for a sound business strategy  Have a clear idea of what you want  Be prepared to dig for all the information needed  Despite how brilliant your strategy may be, you must be committed to see it work, because your strategy reaffirms your reason for being in business  Always evaluate your strategy and fine-tune it from time to time to suit the environment and situation  Never give-up  God bless you in Jesus name. Amen