Strategic Planning: How to increase your revenue and profits in business?

A firm can achieve a higher rate of profit over a rival in one of two ways: either it can supply an identical product or service at a lower cost, or it can supply a product or service that is differentiated in such a way that the customer is willing to pay a price premium that exceed the additional cost of the differentiation. In this article, we will go through each of the strategy in details.
Strategic Planning: How to steer your business to wherever you want to be?

As a business owner/manager, you are tasked with making various decisions. From big questions like “How do you know if it’s the right time to make an investment?”, “Are you putting your business on the right path?” to operational decision like “How can I increase the sales & revenue?”, “How can I reduce the costs in 2 years?” Even when you are in a good place now, but the world and markets keep changing. Where will you be in five years’, ten years’ time? Having a clear strategy can help you steer where you want to be. Every company, no matter big, medium or small needs strategic planning. Without an appropriate strategic plan in place, you can miss out on new opportunities, and may even stand in the way of your own growth.

 

What is a strategy, strategic plan, and strategic planning?

So what exactly is strategy, strategic plan and strategic planning?

Strategy is a map that allows you to steer into the future. Strategy is about the aims and objectives of any organization and how it seeks to achieve these. It is concerned with how managers try to match the capabilities of their organization to fit with market demand as well as competitive and environmental pressures. Strategy is about reducing the complexity of business decision making to manageable proportions.

Strategic plan is the document that shapes the specific activities you will undertake to overcome the challenges you face on the way to your goals. It spells out the roadmap of logical steps you will take to lead you from the start to the finish of your endeavor.

Strategic planning is the process to create this document, in a deliberate, disciplined way, producing a strategy that results in actions that shape what an organization is, what it does, why it does it, and what it will do in the future. It can be used on a large scale to plan business growth over a number of years or may be used on a smaller scale to help one department or a small business achieve a particular goal within a set period of time.

 

Why should I do strategic planning?

You might be thinking: Is it worth embarking on a strategic planning process? Why should I put my organization through strategic planning, changes and, possibly, a time-consuming transformation that has the potential to bring conflict and disruption to the organization and its stakeholders?

It is true that whenever people are asked to focus in a serious way on what is expandable is their organization and to consider doing things differently, their culture, structures, processes, and interaction patterns can be threatened. So why should they put themselves through such a demanding process?

The simple answer is if they don’t, their organization will stagnate and possibly even fail.

Ask yourself the following questions:

  • Do you want your team / company getting the results you desire?
  • Do you want to consistently crush your sales objectives and increase profits?
  • Do you want to lead your team/company to beat the competitors and gain the market share?

Don’t leave execution to chance. Executional Excellence requires planning, leadership and discipline!

Click here “How to create an effective strategic plan”

 

3 generic strategies

A firm can achieve a higher rate of profit over a rival in one of two ways: either it can supply an identical product or service at a lower cost, or it can supply a product or service that is differentiated in such a way that the customer is willing to pay a price premium that exceed the additional cost of the differentiation. In the former case, the firm possesses a cost advantage, in the latter, a differentiation advantage.

This is the idea of generic strategy proposed by Michael Porter. Mainly there are three generic strategies:

  1. Cost Leadership. The company must try to reduce cost, but retain standard quality in order to become the lowest cost producer. In this strategy the company continuously tries to produce/sell its product and services at the lowest cost/price and the main focus is to drive down costs of product through economies of scale/scope or higher efficiencies in production, supplier, distribution process. The resource and organizational requirements are access to capital, process engineering skills, frequent reports, tight cost control, specialization of jobs and functions, incentives linked to quantitative targets.

  1. Differentiation.  The company offers products, unique in ways that are valued by the buyer.  These products should be high quality and higher price and the company differentiate product by adding specific value like functional (R&D), technology, support/service, emotional (image, quality/reliability). The key strategy elements are emphasis on branding advertising, design, service, quality, and new product development.
  2. Focus / Segmentation: The company selects segments in the industry and meets the needs of that segment better than the broader targeted competitors.  This strategy can be combined with low price or differentiation and it is concentrate on particular market segments like geographic, demographic and channel segments.

3 generic strategies

Examples

ryanairlogo

Ryanair

Industry: Airline

Strategy: Cost Leadership

Key strategy elements:

  • Using Secondary airports, reducing landing charges, local subsidies
  • No seat allocation or free meals provided to customers
  • High load factors (85%)
  • Quick turnaround
  • On time service
  • Limited route
bodyshoplogo

The Body Shop

Industry: Cosmetics and Toiletries

Strategy: Differentiation

Key strategy elements:

  • A clear, distinctive identity and personality has been created. Its brand, reinforced and projected through its products, packaging, promoting, retail environment and business system.
  • E.g. Products contain only natural ingredients; packaging emphasizes simplicity and economy; the retail stores are open, unostentatious, and designed to encourage customers to interact with the products and sales personnel; the business system emphasizes commitment, open communication, loyalty, and individual accountability.
  • Guiding all these aspects of differentiation are the Body Shop’s principles and values relating to environmental and social responsibility.
  • The result is that Body Shop is not just a supplier of skin creams and shampoo; it is engaged in creating identity with its customers through commitment to naturalness, honesty, global environmental responsibility, economic support for indigenous people through fair trade. 
TD Ameritrade logo

TD Ameritrade

Industry: Financial services company

Strategy: Focus / Segmentation

Key strategy elements:

  • Focused on ONLINE segment of brokerage industry, offers an electronic trading platform for the trade of financial assets

Do you want to steer your business to wherever you want to be?

Introducing

The Strategy toolkit

A PROVEN 5-steps blueprint that walks you through the ENTIRE STRATEGIC PLANNING PROCESS.

So... What is in the Toolkit?

1. Content Vault

12 Guides to guide you through the Strategic Planning Process

strategic planning guides (full list)

2. Design Vault

Planning Slides + Strategic Plan Template

We took care the design for you so you can spend less time focusing on the little details that go into making your strategic plan deck and more time focusing on the message and content!

 

  • Over 150+ slides in total covering end-to-end strategic planning process

It includes:

      1. Planning Slides: SWOT Analysis, GAP Analysis, Fish Bone, Mind Map
      2. Introduction: Table of Content, Message from CEO, Executive Summary, Company’s mission & vision
      3. Strategy Overview: Summary of the key business strategies that the company is going to implement, including Strategy House, Map and Dashboard
      4. Implementation/Detail Project Plan: Project Plan/Summary, Objectives Chart, Implementation plan (cycle), Business Continuity Plan (process chart) and Capacity Planning
      5. Budget / Resource Management: Budgeting, Cost Management, Effort & Cost Estimation, Quote Comparison, Request for Resources form
      6. Stakeholder Management: Project Team Organization / Structure, Communication Plan, Stakeholder Buy-in Map, Governance Timeline & Map
      7. Performance Dashboard / Project status Report: Roadmap status, Performance Dashboard, Project Risk Analysis, Project Delays Report, Celebrate Success chart
      8. Roadmap / Milestones: 3 years strategic intent, 3 years roadmap, Implementation Process Map / Chart, Milestone Map
      9. Risks, Challenges & Benefits
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