Its the new year, how I miss writing, I guess the slow January got its toll on me. I wasn't all idle, I picked up an e-book on strategic management(for those that are friends with the Flintstones, its an electronic book you can read on a computer or mobile device). Okay, so what is strategic management and how does it affect entrepreneurs?
Strategic management is that aspect of Business that deals with the major intended and emergent initiatives taken by general managers (on behalf of or by the owners), involving utilization of resources, to enhance the performance of an organization in their external environments. It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs(long story shey??), simply it is setting an achievable plan, rules, guidelines, mission and vision and you set out to achieve it.
In today's highly competitive business environment, budget-oriented planning(planning with a said amount) or forecast-based planning(anticipating sales) methods are insufficient for a large corporation let alone a small business to survive and prosper. Your business must engage in strategic planning that clearly defines objectives and assesses both the internal and external situation to formulate strategy, implement the strategy, evaluate the progress, and make adjustments as necessary to stay on track.
Environmental factors internal to the business usually can be classified as:
Strengths (S) or Weaknesses (W)
Those external to the firm can be classified as Opportunities (O) or Threats (T).
Such an analysis of the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. It is instrumental in strategy formulation and selection. (Whew...boring shey, let's jump to the cool part)
STRENGTH
A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Examples of such strengths include:
Patents
Strong brand names(not the church-like names, (wait o, what's wrong with a church-like name? Hian))
Good reputation among customers
Cost advantages from proprietary know-how
Exclusive access to high grade raw materials
Favorable access to distribution/delivery networks
Technological know-how
Social media integration and adverts
WEAKNESS
The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses:
lack of patent protection(when you do not brand your products)
a weak brand name
poor reputation among customers
high cost structure
lack of access to the best natural resources
lack of access to key distribution channels
Lack of social media knowledge
In some cases, a weakness may be the flip side of a strength. Take the case in which a firm has a large amount of manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.
OPPORTUNITIES
The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include:
An unfulfilled customer need(there will always be a customer need that needs to be filled e.g ordering taxi, getting a gift, paying bills, etc)
Arrival of new technologies(eg cashless policy, delivery companies etc)
Loosening of regulations
Removal of international trade barriers
THREATS
Changes in the external environmental also may present threats to the firm. Some examples of such threats include:
Shifts in consumer tastes away from the firm's products
Emergence of substitute products
New regulations
Increased trade barriers
So why not analyse your business today, grab a pen and write out all your strength and edge over your competition; your weakness that makes someone in your genre of business better; foreseeable opportunities in your business and threats posed by either the government or other external sources to your business.
Bear in mind, every weakness can be overturned and fine-tuned into a strength and every threat can be an opportunity(as well as vice versa).
Strategic management is that aspect of Business that deals with the major intended and emergent initiatives taken by general managers (on behalf of or by the owners), involving utilization of resources, to enhance the performance of an organization in their external environments. It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs(long story shey??), simply it is setting an achievable plan, rules, guidelines, mission and vision and you set out to achieve it.
In today's highly competitive business environment, budget-oriented planning(planning with a said amount) or forecast-based planning(anticipating sales) methods are insufficient for a large corporation let alone a small business to survive and prosper. Your business must engage in strategic planning that clearly defines objectives and assesses both the internal and external situation to formulate strategy, implement the strategy, evaluate the progress, and make adjustments as necessary to stay on track.
Environmental factors internal to the business usually can be classified as:
Strengths (S) or Weaknesses (W)
Those external to the firm can be classified as Opportunities (O) or Threats (T).
Such an analysis of the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. It is instrumental in strategy formulation and selection. (Whew...boring shey, let's jump to the cool part)
STRENGTH
A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Examples of such strengths include:
Patents
Strong brand names(not the church-like names, (wait o, what's wrong with a church-like name? Hian))
Good reputation among customers
Cost advantages from proprietary know-how
Exclusive access to high grade raw materials
Favorable access to distribution/delivery networks
Technological know-how
Social media integration and adverts
WEAKNESS
The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses:
lack of patent protection(when you do not brand your products)
a weak brand name
poor reputation among customers
high cost structure
lack of access to the best natural resources
lack of access to key distribution channels
Lack of social media knowledge
In some cases, a weakness may be the flip side of a strength. Take the case in which a firm has a large amount of manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.
OPPORTUNITIES
The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include:
An unfulfilled customer need(there will always be a customer need that needs to be filled e.g ordering taxi, getting a gift, paying bills, etc)
Arrival of new technologies(eg cashless policy, delivery companies etc)
Loosening of regulations
Removal of international trade barriers
THREATS
Changes in the external environmental also may present threats to the firm. Some examples of such threats include:
Shifts in consumer tastes away from the firm's products
Emergence of substitute products
New regulations
Increased trade barriers
So why not analyse your business today, grab a pen and write out all your strength and edge over your competition; your weakness that makes someone in your genre of business better; foreseeable opportunities in your business and threats posed by either the government or other external sources to your business.
Bear in mind, every weakness can be overturned and fine-tuned into a strength and every threat can be an opportunity(as well as vice versa).
Infact, I challenge you to send me your SWOT analysis to my email for review(tundebisi87@yahoo.com)
Now that we've learnt something new, LCH(the funny and narrative hustler genre resumes next week)
I wish you a very successful business year!!!
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