developing winning business strategy

Simmons Performance SolutionsStrategic Insight to Power Growth

Developing Winning Business Strategy

How to define your company's place in the world, and shape the world's view of your company.


Key Issues

1. Defining your company

2. Industry analysis

3. Market Analysis

4. Strategic design

5. Strategic Mapping


Effective business strategy means

identifying a path to occupy achievable space.


Plotting your company’s path takes a clear view

of the space you wish to occupy, and the

obstacles in the way.


Internal development

shapes how others view your

company and its products.


Never forget that the competition gets to make moves as well.


How does an industry and its market

come together to create opportunity?


Strategy Design Template

Industry MarketOpportunity

• Products• Inputs/ Technology• Cost Structure• Trends/Velocity• Partnerships

• Customers• Demand• Cycles• Channels• Alternatives


The Strategic Design Template identifies areas where an industry and the markets it serves converge to create

seams of opportunity.


Cost Structure

Inputs &Technology

Trends/Velocity

Industry Dynamics

Products

Partnerships


Product Analysis

Industry analysis starts with knowing your competition and the solutions they offer the market.

• What products or services are being offered?

• How are the products meeting the market’s demands?

• What market segment are they targeting?

•What are the core points of differentiation?

• Do they come with attachments to increase attractiveness?


Inputs & Technology

Access to inputs and technology dictate how and at what cost a product /servicecan be developed or produced. While the stage of development drives this analysis.

Development Stage

• R& D capability

• Talent development

• Supply chain development

• Quality Control Standards

Production Stage

• Supply chain management

• Operational efficiency

• Logistics standards

• Forecasting


Cost Structure

To be profitable you must be able to control cost. Analysis of

Your cost structure must include a an understanding of:

• Financing and investment sources and their expectations.

• Development cost and payoff estimates.

• Market development and customer acquisition cost.

• Procurement, supply chain, and distribution cost.

• Talent development and retention cost.


Trends/Velocity

Product trends and velocity tell you how quickly product standards evolve. Concerns in this area are:

• Where are the offerings in the product life cycle?

• How are cost trending?

• Is the industry offering product proliferation?

• What point is the industry at in its life cycle?


Partnerships

Partnerships play an intrical role in industry dynamics and can answer critical questions.

• Is a company looking to expand its customer base, and market share?

• What are RD cost which effect innovation?

• Has the industry reached maturation and it is now consolidation?

• What product complements are helping to capture market share?

• Is industry velocity increasing or slowing?


Industry Analysis

Each of the five is important in its own right, but a clear

understanding of their relationships and how they operate as a unit is vital to

the strategic planning process.


Cycles

Demand&Trends

Channels

MarketDynamics

Consumers

Alternatives


Consumers

The consumers and their wants are central to the strategic plan. A company must be clear in who it provides a solution for.

• What solution is the customer base calling for?

• Is the customer base define?

• How large is the customer segment and is it growing?

• Can the customer segment be broken down into subgroups?

A company must not limit its growth by merely focusing on a product's intended customer base, it should identify markets with similarities where the product can gain acceptance.


Demand & Trends

The size of the current consumer base is not enough to justify market entry. Companies must look at how the customer base is trending, and how things which effect or influence purchasing are trending.

• Is there a growth rate associated with the target customer group,and is it associated with a growing demographic.. i.e.. Aging population?

• Are prices declining due to increasing competition or other factors?

• Is there a seasonality to sales which can be leveled off?

• Are sales channels evolving at a rapid rate?


Cycles

There internal and external cycles which are extremely important when deciding on entering a market

• What is the sales cycle?

• Is there a seasonality to the product or market?

• What stage are competing product at in there product life cycle?

• Is the market fully developed?


Channels

Every company must address how their product reaches potential customers. Channel analysis must answer:

• Are there existing sales and distribution channels?

• What stage is the distribution channel mature and dependable?

• Is the leverage within a channel which effects bargaining power?

• Can the distribution channel be disrupted?


Alternatives

Competition does not only come from within an industry. Other industries

offer alternatives which must be taken into account. These substitute

products diminish the bargaining and pricing power of a company and its

industry companions.


Market Analysis

Market analysis should go beyond merely looking at the size of a customer base. It should also look at the elements which create the market landscape. To do so it must include an analysis of the customer base, trends, cycles, channels, and alternatives.


Industry and market analysis give us the answers needed to identify the seams of opportunity to develop

our strategic roadmap.


Making Strategy Work

Example One

Industry Market

Low cost structure Large and increasing customer baseFew competitors Few sales channelslow product development trends Increased buyer bargaining power

This represents a high probability of diminished profit margins., and would not be an

attractive market for a premium goods supplier. But a high volume low cost provide who

could thrive on razor thin margins would do well in this scinerio.


Making Strategy Work

Example Two

Industry Market

High velocity due to a rapidly evolving industry Large and increasing customer baseHigh but manageable cost structure Many alternativesSlow product development trends Disruptive distribution channels

Quick sales cycles

In this scenario a company can adopt a market leadership or premium supplier strategy

where it can target early adopters who are willing to pay a premium for innovative

products. This strategy will enable the company to realize greater profit margins while

setting market and industry standards.


Implementation of Strategy

Once the analysis is complete and a strategy is settled on the implementation process begins by identifying internal needs and developing the following processes.

• Strategic roadmap- the process for occupying the identified space.

• Tactical plans- internal processes to support strategic initiatives.

• Define process goals and inflection points.

• Indentify key performance indicators to measure success.

From here any business can roll out the tactical initiatives to support the identified business strategy which the industry and market can support with effective execution.


Setting Objectives

Company wide Low Cost Provider Premium Supplier

Strategic initiatives Sell through mass market retailers at lower cost

Offer high quality premiumproduct

Operational objectives Efficient mass production and distribution

Obtain high quality inputs, lower defects, effectiveplacement

Tactical objectives Inventory management, cost management practices, efficient acquisition and distribution practices

Quality control process, premium placement

The chart below demonstrates how the company development process works from the top down starting with company wide strategy then down to functional level tactics that position the company to fulfill operational goals.

Once the objectives are aligned with initiatives then goals can be identified. These goals become milestones to use with the strategic mapping process.


Strategic Mapping

The strategic map is a representation of the process that moves the company from its current to a future state to:

• Allow for the development of high level business capabilities in order to fulfill

strategic objectives over time.

• Monitors business outcomes as they relate to the identified strategic

objectives.

• Links objectives to Key Performance Indicators

• Signals changes in process improvement, technology, and external initiatives.

• Identifies accounts for top level risk.

developing winning business strategy

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