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. In a quest for making a profit from their business idea and market potential, many new organizations are ready to enter the market every day. Among such competition, there are still some organizations that perform really well and those that fail to deliver in the first six months of their existence. Did it ever occur to you why it has happened? Why do two similar companies with a similar product and targeting the same market segments have a different level of profit? If not, then this is where you may find the answer.
Differentiation is not just a term but it is imperative to practice in the real business scenarios and what really differentiates an organization from another is strategic business implementation. It is not important to only enter the market considering the market potential but it is crucial to plan strategically how to enter and when to make sure every action taken by the entrepreneur falls the way it was expected. If you are in the next league of starting a new venture of your own, it is important to understand the importance of a strategic business plan. It is on the basis of an appropriate strategic business planning process that an organization would be able to survive for a longer period of time.
The plan also includes market exceptions as well as strategies to construct a stronger base for the organization to sustain intense competition from the industry anytime of its existence. It is crucial in creating a strategic business planning process before starting a business activity to make sure all areas are well covered and each step is taken with the complete understanding of the industry as well as a customer. Are you still quizzed about what exactly are we 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.
Important 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, then 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 expanding knowledge in new territories’ …. ‘To increase the sales of companies existing product as well as introduce a new innovative product on the same lines’, etc. A clear business objective helps an organization have a larger vision as well as help it plan for a longer span of time.
2. Business vision need to be stated
Vision can be related to the aspiration that each organization has in order to have a consistent performance as well as 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 as well as inspire people who are working with it.
3. A mission is important for a strategic business planning process
Having a mission is important for the confidence of not only the management but also those who are 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 activities of the business towards achieving the longer mission of the organization. The mission can be of three to four lines but it does say a lot about the company’s future plans to both the insiders as well as outsiders. A mission of a company may seem like ‘The Company aspires to target new markets with competitive products in the next 5 years’ time span’. If you as an entrepreneur have an aspiration for your company, 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 other in some of the other ways. Therefore the way of marketing its products also needs to be different from others in the competition. What do you really 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, execution of utilizing the organizational resources in the most effective manner. 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, as well as tools, can be implied to create a marketing strategy for your organization such as SWOT analysis, this analysis highlights the strength, weaknesses of the organization vis-à-vis the external environment or the country’s industrial environment that the organization would be facing. It also highlights the opportunities as well as the threat 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 to understand the political, economic, social, technological, environmental as well as legal factors associated with the external environment. These factors can help you design appropriate strategies to enter the market; explains how to operate in the competitive scenario; defining parameters for the organizational objectives as well as strategies to expand into new territories or having 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 one to create an establishment that would ensure risk is minimal? Having an understanding of the market trend is extremely crucial as it provides the appropriate information as well as statics that may help a company plan its financial as well as operational activities in the most appropriate manner. The market trend reflects the overall behavior of the industry with respect to product acceptability, market accessibility, and constraints as well as the product demand among customers.
Each market has a trend where products are acceptable due to its 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 have a clear explanation about the market segmentation, this helps in identifying the particular segment that the company is targeting at; market forecast, which explains the future expectation about the market as a whole. The market is mainly driven by the customers; therefore, the trend analysis needs to be focused on the need and preferences of the customers that mainly regulate the market as well as their buying decisions. The data and information derived from conducting market analysis are useful in creating a strategic business plan.
6. Understand competition
Do you think market competition has both positive as well as negative impacts on the organization’s performance? If yes… then we are on the same page. Market competition not only regulates the business activities across industries but also inspires the new entrant to be innovative in their approach. Competition is mainly driven by the market accessibility as well as 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 due to the competitive pricing that an existing 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 own product to create differentiation among customers as well as their strategies related to the market operation. It is important to understand your competitive position with respect to those of the existing competition in the industry to create demand for our product as well as forecast sales. Competitor analysis is an important 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 as well as implies ways through which 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, then this section will provide you all the necessary details required 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, positioning of the product with respect to 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 who may have started at a huge level but suddenly disappeared smoothly? What really happened to them? Where did they go and how? … These questions are important 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 for a brand name. Selling off everything and eloping from accountability is never a solution, the way out must be strategically suitable for people having the financial investment as well as for people 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 as well as capital in the most effective as well as 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 in order to streamline the processes involved as well as keeping the objectives in the practical form. Having timelines designed on paper would give certainty to the plans as well as is motivating for 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. Having created possibilities for such diligence keeps the entrepreneur prepared both technically as well as financially without causing any unnecessary burden on it along with creating a feeling of demotivation within the system.
It is believed that after reading this article the reader will get all the required information as well as 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 is on the basis of appropriate planning that an organization would be able to survive for a longer period of time. These are the following external link related to the strategic business plan.