Click here to read SME-Part B-Lecture 5-Sub Lecture 5A
Step 1: Developing a vision and translate it into a mission statement
Vision: It means the result of an entrepreneur's dream. An entrepreneur dreams of a dream and wants to paint a picture of that dream and wants everyone to see that picture of the dream.
A clearly defined vision directs which decisions should be taken and motivates employees of the organization.
Mission statement: It is a written expression of beliefs, values of an entrepreneur. Reflection of vision is observed in a mission statement and a written format of the mission statement will exist.
A mission statement is a strategic compass of an organization.
89 percent of employees have mission statements.
23 percent of workers believe to work according to these mission statements and follow these mission statements.
Step 2: Assessing strengths and weaknesses
Strengths are positive internal factors.
Weaknesses are negative internal factors.
Step 3: Scanning environment for opportunities and threats
Opportunities help an entrepreneur to accomplish goals.
Threats reduce the ability of an entrepreneur.
The Power of External Market Forces
Technological
Competitive Economic
Political Social demographic factor
Step 4: Identifying key success factors
One has to identify key success factors. One has to focus on the strengths and weaknesses that determine the relative success of market participants.
Key Success Factors means the key to one's success.
Key Success Factors is the key to unlock the secrets of competing successfully in a particular market segment.
Step 5: Analyzing competitors
One has to avoid surprises from existing competitors' new strategies and tactics. one has to identify potential new competitors and the threats that competitors impose.
One has to improve reaction time to competitors' actions. For instance, Banglalink offered a lower call rate. Observing it, GP also lowered call rate than the call rate of Banglalink.
One has to develop counter-strategy against competitors.
One has to anticipate rivals' next strategic moves.
Techniques for Analyzing Competitors
a. Monitoring industry and trade publications
b. Talking to customers and suppliers: It helps to know the reason for loyalty to the competitor's company
c. Debriefing employees, especially sales representatives and purchasing agents regularly: It should be performed because they are the nearest to customers.
d. Attending trade shows and conferences and studying competitors' sales literature: By following sales literature, one can know about competitors.
e. Watching employment advertisements from competitors to get ideas about which types of employees a competitor looks for and which type of functions a competitor does.
f. Learning about the kinds of equipment and raw materials that competitors purchase
g. Buying competitors' products and benchmark them: Benchmark means standard. One has to do better than the benchmark to beat competitors.
h. One has to study credit reports of competitors: Credit report means financial statements. These give an idea in which area capital of a competitor can be used.
Step 6: Creating goals and objectives
Goals are broad, long-range attributes. Goals are the final achievements.
Objectives are more detailed, specific targets of performance. Objectives are SMART.
S- Specific
M-Measurable
A-Attainable: Objectives must be achievable.
R-Realistic
T-Timely: Objectives must be achievable in the time limit.
Step 7: Formulating strategies
A strategy is a road map of actions and a strategy is a blueprint.
Formulating strategies refers to making a game plan for acquiring a competitive advantage.
Three aspects of formulating strategies such as cost leadership, differentiation, and focus.
Cost leadership: One creates value at the lowest cost and sets up a different value for a specific group.
A cost leader determines the floor price of the industry.
When to follow cost leadership:
a. Sensitive to price changes: More Price elasticity
b. Homogenous product
c. Benefit from the economy of scale
Differentiation: It refers to serving customers differently.
How can differentiation be created?
Quality, performance, unique and creativity
Differentiation is based on something unique and good.
One has to do something unique and good and set up it as differentiation.
Focus: It is based on specific segments. Niche marketing is an example of a focus strategy.
One does not need to serve all customers in the market. One has to do serve intensively. For instance, BMW Car is made for a specific group in the market.
Step 8: Translating plans into actions
It refers to implementing the plan. In other words, it means converting the plan into action.
63 percent of results are achieved on the strategic plan.
Creating projects by defining:
a. Purpose
b. Scope
c. Contribution
d. Resource requirements
e. Timing
Step 9: Evaluation of actions
One has to establish accurate controls of the measurement for action.
One has to check if action is on the right track. If an error happens in action, one has to correct it.
One has to evaluate key performance indicators. If necessary, one has to take corrective action.
Balanced Scorecards
It is a set of measurements for the measurement of financial and operational functions. It is comprehensive quickly.
4 perspectives of Balanced Scorecards:
Customers: It indicates how customers see an organization.
Financial: It indicates if shareholders are satisfied with the organization.
Internal Business: It refers to the key core competencies of an organization. An organization has to check its strengths and weaknesses and if necessary, the organization has to improve them.
Innovation and Learning: An organization has to decide if it has to take another process or mechanism in the business.
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