Strategic Planning for Today
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Transcript of Strategic Planning for Today
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Typically, IFAs and business managers are often so preoccupied with regulatory
issues, business demands and time pressure issues that they lose sight of their
ultimate business objectives. With major landscape shifts on the horizon with the
RDR, move of the FSA to the CPMA as well as the backdraft of the banks financial
crisis and governments austerity combating measures, is precisely where a facilitated
business review for the preparation of a strategic plan is a virtual necessity. This may
not be a recipe book for success, but without clear direction, planning, awareness of
external impacts as well as internal crises, a business is much more likely to fail.
The support you receive from CEI Compliance Consultancy is targeted at corporate
development, corporate strategy planning, strategic management and strategy
consulting and will involve the following.
Planning: strategic thinking and strategic business planning identify where
the new opportunities lie.
Positioning: Strategy consulting gives your company the insight to be perfectly
placed to exploit each opportunity
to the full.
Process: putting in place a strategic
management process ensures that
your company is constantly primed
to use events to its best
advantage.
As the cat in Alice in Wonderland states;
If you dont know where you are going,
it doesnt matter which road you take.
A sound plan should: Serve as a framework for decisions
or for securing support approval Provide a basis for more detailed
planning. Explaining the business to others in order to inform, motivate & involve Assist benchmarking & performance monitoring
Stimulate change and become building block for the next stage
Your strategic plan should not be confused with a business plan. The former is likely
to be a short document whereas a business plan is usually a much more substantial
and detailed document. A strategic plan can provide the foundation and frame work
for a business plan, providing vision and identify the gaps and obstacles that the
business plan needs to address.
A strategic plan is different from an operational plan. The strategic plan should be
visionary, conceptual and directional in contrast to an operational plan which is likely
to be shorter term, tactical, perimeter focused, implementable and easily
measurable. As an example, compare the strategic process of planning a holiday
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(where, when, duration, budget, who goes, how travel are all strategic issues) with the
final operational preparations (tasks, deadlines, funding, weather, packing, transport
and so on).
Some Consultancys will use systems and processes that are common sense but have
a catchy acronym such as a M.O.S.T. analysis (Mission, Objectives, Strategies &
Tactics) and try to impress you with the structure of the logic.
The key to success is not to have a catchy name or fancy logic dressed up as some
sort of panacea, but for a practical, robust and meaningful plan to be formulated
based on the unique and precise needs of YOUR business. There is no one size fits
all answer to strategy planning and there are no quick wins. For this whole process
to hang together you need a systematic, objective overview and you need to ensure
that every part of the process locks into place, so that your whole business movesforward in an integrated and effective way.
A clear, carefully stepped corporate strategy invigorates your business, energizes
your team and puts your long-term goals within you and your teams reach
Basic Approach to Strategic Planning
Strategic management is a crucial element in keeping your business firing on all
cylinders and driving forward. But where can you find the time, the perspective or the
expertise? Working with you, your business plan and
your vision, a facilitator can help provide that
essential strategic management understanding and
experience to help you stand back; evaluate; then
moveforward.
A critical review of past performance by the owners
and management of a business and the preparation
of a plan beyond normal budgetary horizons require
a certain attitude of mind and predisposition.
Some essential points which should to be observed during the review and planningprocess include the following: Relate to the medium term i.e. 2/4 years Be undertaken by owners/directors Focus on matters of strategic importance Be separated from day-to-day work Be realistic, detached and critical Distinguish between cause and effect Be reviewed periodically Be written down, recorded and reviewable
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As the precursor to developing a strategic plan, it is always desirable to clearly
identify the current status, objectives and strategies of an existing business or the latest
thinking in respect o f a new venture. Correctly defined, these can be used as the basis
for any critical examination to probe existing or perceived Strengths, Weaknesses,
Threats and Opportunities. This then leads to strategy development covering the
following issues discussed in more detail below:
> Vision> Mission> Values
> Objectives Strategies Goals
> Programs
Key Steps towards a Strategic Plan
The preparation of a strategic plan is a multi-step process covering vision, mission,
objectives, values, strategies, goals and programs. These are discussed below.
The Vision
The first step is to develop a realistic Vision for the business. This should be presented
as a pen picture of the business in three or more years time in terms of its likely
physical appearance, size, activities etc. Answer the question: "if someone from Mars
visited the business, what would they see (or sense)?" Consider its future products,
markets, customers, processes, location, staffing etc. Here is a great example of a
vision:
I will come to America, which is the
country for me. Once there, I will
become the greatest bodybuilder in
hi st o ry . I wi l l go i nt o mo v i es as
an actor, producer and eventually
director. By the time I am 30 I will have
starred in first movie and I will be a
millionaire. I will collect houses, artand automobiles. I wil l marry a
glamorous and intelligent wife. By 32, I
will have been invited to the White
House.
Attributed toArnold Schwarzenegger;
electedGovernorof the State of California in 2003.
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The Mission
The nature of a business is often expressed in terms of its Mission which indicatesthe purpose and activities of the business, for example, "to design, develop,
manufacture and market specific product lines for sale on the basis of certain
features to meet the identified needs of specified customer groups via certain
distribution channels in particular geographic areas".
A statement along these lines indicates what the business is about and is in finitely
clearer than saying, for instance, "we're in electronics" or worse still, "we are in
business to make money" (assuming that the business is not a mint!). Also, some
people confuse mission statements with value statements (see below) - the former
should be very hard-nosed while the latter can deal with 'softer' issues surrounding
the business. The following table contrasts hard and soft mission statements.
Hard Soft
What business is/does Reason for existence
Primary Competitive
products/services Unique/distinctive
Key processes & features
technologies Important
Main customer groups philosophical/social
Primary issues
markets/segments Image, quality, style,Principal standards
channels/outlets Stakeholder concerns
Hard Statement Soft Statement
X Ltd designs, develops, assembles and
markets systems for data base
management. These systems integrate its
proprietary operating system software with
hardware supplied by major manufacturers,
and are sold to small, medium and large-
sized companies for a range o f business
applications. Its systems are distinguished by
a sophisticated operating system, which
permits use without trained data-
processing personnel.
Our mission is to enhance our
customers' business by providing
the very by providing the very
highest quality products and
services possible. Our customer
support strategy is based upon
total, no-compromise customer
satisfaction and we continually
strive to offer a complete package
of up-to-date value added solutions
to meet our customers' needs. We
value above all our long term
customer relations.
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Intel's original plan, written on the back of a menu is an excellent example of a
hard statement:
The company will engage in research, development, and manufacture and sales of
integrated electronic structures to fulfill the needs of electronic systems
manufacturers. This will include thin films, thick films, semi-conductor devices,
and........ A variety of processes will be established, both at a laboratory and
production level ...... as well as the development and manufacture of special
processing and test equipment required to carry out these processes. Products may
include diode transistors........ Principal customers for these products are expected to
be the manufacturers of advanced electronic systems .... It is anticipated that many of
these customers will be located outside California.
When drafting a mission statement, critically examine every noun, adjective and verb
to ensure that they are focused, realistic and justified. Too much huff and puff and no
one will take it seriously: too weak and it will be forgotten instantly.
The Values
Values are the area that
is needed to address
the beliefs and
principles of the
governance and the
operation of the business
and its conduct or
relationships with society
at large, customers,
suppliers, employees,
local (or wider)
community and other
stakeholders.
The Objectives
The next key element is to explicitly state the business's objectives in terms of the
results it needs/wants to achieve in the medium/long term.
The following terms have been used in strategic planning objectives: desired end
states, plans, policies, goals, strategies, tactics and actions. Because of this confusion,
definitions vary, overlap and fail to achieve clarity, thus people lose interest at this
stage for fear of doing the wrong thing. The most common concept is to think of
these outcomes as specific, time bounded statements of intended future results and
general and continuing statements of intended future results, which most models
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refer to as either goals or objectives (often interchangeably).
Some advocates would then have you arrange your objectives in a priority order, withthe Top Rank Objective (TRO), Second Rank Objective (2RO) etc. however we find that
typically the objectives or goals are all interlinked either in parallel or complementary
to each other, often using similar resource or effort, and there is no point in re-
inventing the wheel each time. The main advantage is that people typically have
several goals at the same time. "Goal congruency" refers to how well the goals
combine with each other. Does goal A appear compatible with goal B? Do they fit
together to form a unified strategy? "Goal hierarchy" consists of the nesting of one or
more goals within other goals where you could have different sub goals for different
departments or business areas, which combined would provide the supporting legs of
an over-arching goal or objective from a senior management perspective.
Goal setting often requires having short -term, medium-term, and long-term goals. In
this model, one can expect to attain short-term goals fairly easily: they stand just
slightly above one's reach. At the other extreme, long-term goals a pp ea r ve ry
difficult, almost impossible to attain. In Jim Collins Book From Good To Great
he mentions that within the objectives and in the strategic management jargon many of
the companies that achieved great sometimes referred to "Big Hairy Audacious Goals"
(BHAGs) in this context.
Aside from presumably indicating a
necessity to achieve profits,objectives should relate to the
expectations and requirements of all
the major stakeholders, including
employees, and should reflect the
underlying reasons for running the
business. These objectives could
cover growth, profitability,
technology, offerings and markets
and will be impacted by Porters
forces and a correct analysis of thoseelements providing robust, feasible
and attainable outcomes over time.
The Strategies
Strategies are the rules and guidelines by which the mission, objectives etc. and how
they may be achieved. A common mistake of many companies, small and huge, is that
they invent for themselves a short term strategy and a long term strategy and often
never the twain shall meet. You devise a strategy, and that strategy stretches from
the short term over to the long term with various activities and checkpoints in-built.
The key is to be flexible. No goals or objectives are cast in stone, and they can be
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revised as external and internal forces demand change. The shorter term strategy is
really the path currently undertaken whilst the overall strategy is a line on a map
saying we want to go from here to here and we expect to pass through these otherplaces along the way.
Strategies can cover the business as a whole including such matters as recruitment,
diversification, organic growth, or acquisition plans, or they can relate to primary
matters in key functional areas, for example:
The company's internal cash flow will fund all future growth.
New products currently being developed
and tested will progressively replace existing
ones overthe next 3 years.
All assembly work will be contracted out tolower the company's break-even point.
As Kimberly Clark said Shut the Paper
Mills, we want to make consumable paper
goods
Use SWOTs to help identify possible strategies by
building on strengths, resolving weaknesses,
exploiting opportunities and avoiding threats.
The Programs or TacticsThe final elements are the Programs which set out the implementation plans for the
key strategies. These should cover resources, objectives, time-scales, deadlines,
budgets and performance targets or in other works the Tactical Plans.
The tactical plan is developed by the management team (note: Not the Senior
Managers per se), which consists of the very people responsible for getting the actual
work done. They have to make sure that the strategy developed to achieve the
mission of the organisation is successful, within the limits of available means and
resources. Therefore, it is necessary to understand strategic goals and systematically
decipher those goals in order to formulate an effective tactical plan that charts
segregated courses of action to result in the attainment of strategic objectives.
Tactical moves are specific activities that are time bound (usually stated in weeks or
months) and are geared to result in a predefined outcome.
Tactical plans are most often used in larger businesses not because they arent
needed in small business, but because small business owners very often dont take
the time to formulate them. Ironically, tactical plans are even more important to
small businesses, whose survival often depends on plan execution due to a lack of
deep pockets or other resources.
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If you have a small business but have not taken the time to implement your business
strategy or tactical plan, use the information above to do so. It certainly wont be easy
but the end result will be well worth the time and effort.
Use Hindsight when Strategic Planning
Statements on vision, mission, objectives, values, strategies and goals are not just
elements of future planning. They also provide benchmarks for a historic review.
Most managers will find it exceedingly difficult to develop a future strategy for a
business without knowing its current strategies and measuring their success to
date.
Effect not Equal to Cause when Planning Strategy
When reviewing a business it is essential to cut through the symptoms of problems
and reach the underlying causes. Questions which can assist in revealing the real causes
include the following:
"What stopped the business from?" "What caused the cause of?" "Why didnt
the business achieve a 25% return?"
Do not turn it into a witch-hunt. No purpose is
gained from victimising an individual, ifmistakes were made, then a training need is
apparent, if collective decisions proved
flawed, then lessons are to be learned. Never
ask who was the cause of the failing other
than in a supportive context.
By way of an example consider why this
company may be unable to increase its
market share:
Because;
It cannot penetrate major customers
Its product range is too narrow
The company doesn't have the capability to produce additional
products
Of shortcomings in R & D
Of a lack of expertise and resource
R & D is not an immediate priority
Of a lack of profits
Of a high interest burden
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The company is over-reliant on borrowings The shareholders won't/can't raise additional permanent capital.
The moral in this case is that there are no major customers due to under-
capitalisation!
What is apparent is that we must understand our companies position within the
marketplace as a whole and locally regarding industry peers and their advantages,
bargaining powers of suppliers and clients, new entrants into the distribution arena
and substitute products or other means people may employ to obtain their desired
outcomes, and if we can exploit any of these areas, getting the jump on our
competitors. Rolling all that into the equation we can then work out where we are
today and where our strengths, weaknesses, opportunities and threats may lay.
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Understanding SWOT
Strengths
During your SWOT analysis you will consider a variety of strengths from within your
business. It is important to note that these strengths will all be internal to your
business.
Strength Defined: Strength is a core capability of your business where your business
has an advantage over your competitor(s), which your customers value i.e. you
passed the better than your competitors test.
Some Possible Strengths
When completing your analysis you will find that your strengths will generally fit into
two categories
1. Tangible Strengths, these tend to be strengths that can be precisely identified,
measured or realized
2. Intangible Strengths, these tend to be strengths that cannot be physically touched
or physically measured
Some examples of strengths that maybe found in your business include
Some possible tangible strengths that you may find in your business
Consider your assets including plant and equipment
Are your products unique or market leading?
Is your service offering (customer experience) unique or market
leading?
Have you got sufficient financial resources to fund any changes you would
like to make?
Do you use superior technology in your business?
Some possible intangible strengths that you may find in your business
Do you have or stock strong recognizable brands
Your reputation - are you considered a market leader? or an expert in your
filed?
Do you have good relationship with your customers? (Goodwill)
Do you have strong relationships with your suppliers
Is your business Innovative?
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Weaknesses
During your SWOT analysis you will consider a variety of weaknesses from within your
business. It is important to note that these weaknesses will all be internal to your
business.
Weakness Defined: A weakness
is a core capability of your
b u s i n e s s w h e r e y o u r
competitor(s) have an advantage
over your business, which your
customers value i.e. you failed
the better than your competitors
test.
Some Possible Weaknesses
When completing your analysis
y o u w i l l f i n d t h a t y o u r
weaknesses will generally fit into
two categories
1. Tangible Weaknesses, these tend to be weaknesses that can be precisely
identified, measured or realized
2. Intangible Weaknesses, these tend to be weaknesses that cannot be
physically touched or physically measured
Some examples of weaknesses that maybe found in your business include
Some possible tangible weaknesses that you may find in your business
Insufficient financial resources to fund changes
High costs (Not high price, high costs specifically refers to your operating
costs)
Inferior technology
Low volume and restricted in your ability to scale up
Some possible intangible weaknesses that you may find in your business
Weak or unrecognizable brand
Weak or unrecognizable image
Poor relationships with your customers
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Strategic PlanningFor TodayByLeeWerrellFInstSMMCharteredMCSICertPFS
Opportunity
UnderstandingSWOTOpportunities
During your SWOT analysis you will consider a variety of opportunities to your
business these Opportunities will all be external to your business.
An opportunity is an environmental condition in your macro or industry environments
that can improve your organizations competitive position relative to that of your
competitors.
You will find your opportunities when completing your industry environment analysis
and your macro environment analysis.
PossibleOpportunities
When completing your analysis you will find that
your O pport unit ie s wil l gene ra lly f it into t wo
categories
1. Industry Opportunities
Industry opportunities are opportunities in your
industry environment and generally reduce the
level of price competition in your industry. Todiscover more about your industry environment
we use Porters five forces.
2. Macro Opportunities
Macro opportunities are in the broader environments that generally affect all
businesses in your region, click here to read more about macro environment
analysis.
Some possible Industry Opportunities are
Expand your product range Diversify your business interests
Expand into your customer's field (Forward Integration)
Products or service in growth
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Some possible Macro Opportunities are
Favourable changes to legislation
Favourable changes to any import/export constraints
Favourable economic outlook Favourable cultural shifts
Technology that your business can utilise such as Ecommerce or Internet sales
Threats
During your SWOT analysis you will consider a
variety of threats to your business these
threats will all be external to your business.
A threat is a forecast environmental conditionthat is out of your control and has the
potential to harm your businesses profitability.
A common example: If you import goods for
resale, then a negative shift in exchange rates
will force up your costs, if you are unable to
pass these costs on to your customers, your
margins will reduce. So, exchange rate volatility could be a threat.
Some Possible ThreatsYou will find that your threats will fit into two categories;
Industry threats
Industry threats are related to an increase in the competition in your industry or a
reduction in market size. Generally industry threats threaten to reduce your
businesses profitability.
MacroThreats
Macro threats are the kinds of things that affect all industries in your region. Thesealso generally result in a risk of reduced profitability.
Some possible IndustryThreats include
Low cost imports, the threat of low cost imports affects almost any
manufacturer in the developed world, with the possible exception of food
manufacturing.
Consumer ability to shift to a substitute product and changing demand for
substitute products, consider the manufacture of nails used in the assembly of
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house frames, if housing developers shifted from timber frames to steel framed houses,
demand for nails would drop significantly.
Slow market growth or decline in market size, western countries the demand for alcoholic
drinks remains pretty flat
SomepossibleMacroThreats include
Demographic changes, the aging workforce making it difficult to get skilled workers in many
developed countries.
Industry Regulation, a good example is aged care facilities who are impacted by increasing
regulation and increased costs to administer these new regulations.
Tips to Avoid the
Common SWOT
Analysis Mistakes
Here are three of the most
common mistakes people
make when completing
their SWOT diagram.
Do your homework
Link your actions with
your SWOT
Stay away from
solutions
You will find that the content of the vast majority of completed SWOT diagrams contain unverified
strengths and weaknesses that are not aligned to the organizations core capabilities. Worse still, the
people completing the SWOT have not used our better than your competitor test.
Most completed analysis also show that those completing the SWOT have only a limited
understanding of the organisations strategic environments.
Link your actions with your SWOT
During the formation of strategy and development of business plan activities the
majority of people do not focus on the content of their SWOT analysis. Instead they start to go off on a
tangent and formulate plans and objectives and almost completely ignore their SWOT and develop a
business plan that has no regard for this analysis.
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Stay Away from solutions
A SWOT Analysis is an analysis tool only that should contain independently verifiable statements
of fact. You should stay away from solutions or developing solutions until you have a completedSWOT diagram. Once you have a competed SWOT Diagram you will shift to solution mode.
You will find that many people will want to list solutions in the opportunities section of their
SWOT. It is therefore vitally important, though challenging, to stay away from solution mode. This
is why we always recommend a facilitation exercise rather than doing it yourself. A facilitator
can offer guidance and direction and stop that tangential discussion before they start.
Our Consultancy, with its expert team of business management consultants will act as your out-
of-house in-house management team, whether on a project by project or on a long-term
basis. We will help you manage your business to optimise your opportunities.
Having been involved in Strategic Planning and Risk Assessment with the Boards of Directors of
well-known companies, we have also been involved in developing the Operational and Tactical
plans that implement the vision. We can provide on-the-spot support and guidance for the
length of the project, from when it is a twinkle in the eye, through to the launch and up to its
successful embedding.
With our select team of experienced strategic planning consultants, our consultants
will help you generate the business strategy and will guide you through putting in
place the necessary effective and precise strategic process that is targeted to ensure
your product or service has the right backing, the right positioning and the rightpromotion to provide sustainable success.
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Whatever the size of your business, from start-up to international company, specific
objective strategic planning support can provide the crucial difference which will
mean that resources are concentrated constructively, energies are focused creativelyand the outcome is fully profitable over the long term.
Companieswehavebeen involvedwith in the last10 years;
CEI Compliance can help provide a full compliance support service, reducing
required management time, ensuring all areas are up to date and working for your
firms long term benefit. Call 07092 289901 today or go online atwww.ceicompliance.co.uk
This whitepaper was written
by Lee Werrell FInstSMM Chartered MCSI
Cert PFS, founder of CEI Compliance Limited.
Lee is
contactable at any time and welcomes enquiries from all
businesses.
Call 0800 689 9 689
Avoid S166 Skilled Persons Reports download our free uide here
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