Introduction to Strategic Business Planning Process
In a competitive scenario like the present one, companies are fighting with each other for even a smaller portion of market share, trying to create a space for themselves through market demand. Many new organizations are ready to enter the market daily in a quest to profit from their business idea and market potential. Among such competition, some organizations still perform well, and those fail to deliver in the first six months of existence. Did it ever occur to you why it has happened? Why do two companies with a similar product and targeting the same market segments have a different profit levels? If not, then this is where you may find the answer.
Differentiation is not just a term, but it is imperative to practice in real business scenarios and what differentiates an organization from another is strategic business implementation. It is not essential to only enter the market considering the market potential. Still, it is crucial to plan strategically how to enter and when to ensure every action taken by the entrepreneur falls as expected. If you are in the next league of starting a new venture of your own, it is essential to understand the importance of a strategic business plan. It is based on an appropriate strategic business planning process so that an organization can survive for a longer period of time.
The plan also includes market exceptions and strategies to construct a more substantial base for the organization to sustain intense competition from the industry anytime of its existence. It is crucial to create a strategic business planning process before starting a business activity to ensure all areas are well covered and each step is taken with a complete understanding of the industry and the customer. Are you still quizzed about what exactly we are talking about here? If so, then you are on the right page; this article will help you assist with an overall guideline on how to design a strategic business planning process.
Essential Points to Create Strategic Business Planning Process
To create a strategic business planning process, you may need to keep certain important things in your mind, and they are:
1. Clarity of business objective
Did it ever occur to you that exactly why do you aspire to conduct business in a competitive environment? If not, this may be the ideal time to think about it. A business is a series of activities that needs a proper strategic business planning process as well as implementation, but that would only be possible if the objective of doing the business is clearly defined. A business may be conducted for various reasons such as ‘To gain international market exposure and expand knowledge in new territories’…. ‘To increase the sales of companies existing products as well as introduce a new innovative product on the same lines,’ etc. A clear business objective helps an organization have a larger vision and helps it plan for longer.
2. Business vision needs to be stated
Vision can be related to each organization’s aspiration to have a consistent performance and market aspiration. A business vision mainly includes the purpose, value as well as long-term goals of the organization. Well-established visions of an organization help its stakeholders relate to it and inspire people working with it.
3. A mission is essential for a strategic business planning process
Having a mission is essential for the confidence of the management and those associated with the organization, i.e., the customer. Placing a vision in a strategic business planning process leaves scope for business expansion; it directs other business activities toward achieving the organization’s long mission. The mission can be three to four lines, but it does say a lot about the company’s future plans to both insiders and outsiders. A company’s mission may seem like ‘The Company aspires to target new markets with competitive products in the next five years’ time span.’ Suppose you, as an entrepreneur, have an aspiration for your company. In that case, it must be reflected in the mission statement to help the stakeholders understand the direction of your strategic business plan and execution.
4. Create a marketing strategy
Each business is unique and different from the others in some other way. Therefore, marketing its products also needs to be different from others in the competition. What do you understand by marketing strategy? If you feel this is not your area of competence or your company may not need it … then you might be wrong. Every company needs a marketing strategy as it lays down the strategic business planning process and execution of utilizing the organizational resources most effectively. Marketing strategy is a critical factor that helps the organization assess the current market competition by understanding the external and internal environment of the company.
Many techniques and tools can be implied to create a marketing strategy for your organization, such as SWOT analysis; this analysis highlights the strength and weaknesses of the organization vis-à-vis the external environment or the country’s industrial environment the organization would face. It also highlights the opportunities and threats that a company would face in a similar environment.
PESTEL analysis is yet another tool that can help you create a marketing strategy for your business, as it helps the organization understand the political, economic, social, technological, environmental, and legal factors associated with the external environment. These factors can help you design appropriate strategies to enter the market, explain how to operate in the competitive scenario; define parameters for the organizational objectives, and strategy to expand into new territories or have a safe exit from the industry.
5. Market trend analysis
Did it ever occur to you that among many factors, what would be the most crucial to creating an establishment that would ensure minimal risk? Understanding the market trend is vital as it provides the appropriate information and statics to help a company plan its financial and operational activities most appropriately. The market trend reflects the overall behavior of the industry with respect to product acceptability, market accessibility, constraints, and product demand among customers.
Each market has a trend where products are acceptable due to their innovative technology or some unique features associated with it; the analysis would help understand the same and design the strategic business plan accordingly. The market analysis must clearly explain the market segmentation; this helps identify the particular segment the company is targeting; market forecast, which explains the future expectation about the market as a whole. The customers mainly drive the market; therefore, the trend analysis needs to focus on the customers’ needs and preferences that mainly regulate the market and their buying decisions. The data and information from conducting market analysis help create a strategic business plan.
6. Understand the competition
Do you think market competition positively and negatively impacts the organization’s performance? If yes… then we are on the same page. Market competition regulates business activities across industries and inspires the new entrant to be innovative in their approach. Competition is mainly driven by market accessibility and the credibility of a company or brand value present in the industry for a longer span of time. For the customer, it is easier to trust a new product of an existing company rather than an old product from a new company; this is due to either the trust factor or the competitive pricing that a current organization can provide because of economies of scale.
It is crucial to understand the existing competition to identify the scope of potential innovation in your product to create differentiation among customers and their strategies related to the market operation. It is essential to understand your competitive position with respect to the existing competition in the industry to create demand for our product and forecast sales. Competitor analysis is an integral part of the strategic business planning process, without which an entrepreneur fails to launch a business proposition successfully in the industry.
7. Design a Marketing Mix
As a part of the strategic business planning process, having a marketing mix is crucial and implies ways a product can be successfully launched in the market. Have you ever wondered on what basis do companies design the product, price, positioning, and process of introducing the new product in the market? ….. If not, this section will provide you with all the necessary details for your strategic business planning process. To create a desirable proposition for the customer, a company would need to design a valuable marketing mix that involves product innovation, pricing strategies to create differentiation by using advanced technologies, and positioning of the product concerning the market, i.e., premium, local or global, placement is also crucial to create an exact fitment of the product in the required market, the process is the systematic functioning from planning till the execution of the product and people who contribute a great differential from creating the product to introducing it in the market as well as making sure that the demand for the product also remains and promotion is the last yet most effective method to make sure that the demand for the product is created at the right time as well as among the target segment.
8. Exit Strategy
Have you ever thought about companies that may have started at a massive level but suddenly disappeared smoothly? What happened to them? Where did they go, and how? … These questions are essential to answer, especially when getting into a competitive industry today. The strategic business plan must have options clearly stating that in case the business proposition did not work well as per planning, then how the entrepreneur seeks to exit the market. Having a safe exit with minimum losses is the crucial part of the strategic business planning process, considering the financial losses it may bear as well as harm the goodwill of a brand name. Selling off everything and eloping from accountability is never a solution; the way out must be strategically suitable for people with financial investment and those working for the organization.
Human resource forms a strong asset for the organization; therefore, the exit strategy must also clearly state how it plans to allocate its human resource and capital in the most effective and efficient manner. An exit strategy must also have a timeline to analyze the risk-taking capacity of the organization; along with that, it defines the foresightedness of the entrepreneur as well as the viability of the organization. The ways to minimize losses must also be clearly defined, and an analysis of how an entrepreneur plans to recover his or her losses is extremely imperative.
The strategic business plan designed must have appropriate timelines mentioned from the inception of the idea till execution to streamline the processes involved as well as keep the objectives in the practical form. Having timelines designed on paper would give certainty to the plans and motivate the entrepreneur to complete the task within the time frame. The timeline must also include the possibility of extensions due to unforeseeable reasons or due to any technical diligence. Creating possibilities for such diligence keeps the entrepreneur prepared both technically and financially without causing any unnecessary burden on it and creating a feeling of demotivation within the system.
It is believed that after reading this article, the reader will get all the required information and foresight to plan and design a strategic business plan for his new venture in the most appropriate manner.
This has been a guide to a strategic business planning process based on appropriate planning so that an organization could survive for a more extended period of time. These are the following external link related to the strategic business plan.