Every kind of business is processing based on its relative strategy. Strategy planning is made as the direction of a company is heading and the blueprint of the company is running. The purpose of strategic planning is to build the status of the company in the market, compete with rivals, and meet requirements of customers. Finally, make the profit.
Every business decision should be strategic and well-planned. Strategic planning can help companies precisely make a business development plan according to its own market situation, business goal, resources, and opportunities.
We are not necessary to clarify too much about the importance of the strategic planning because you must know that. But here is the question: how to do the strategic planning process?
Forecast and Set a Goal
SWOT Analysis is the most common and popular method to forecast and analyze the environment, resources, the competition, and shortages of the business own. After analyzing all the situations through SWOT Analysis, you can set a general goal for three to five years.
But fewer companies will only chase one goal. Because most of the businesses are assembled by several goals such as the profit rate, sales volume, market share, customer loyalty, and more. As a result, after setting goals, the company can use goal management to efficiently achieve these goals.
Moreover, a general goal is not sufficient for strategic planning. This way, as a manager, you can integrate S.M.A.R.T. goals and 5W2H to help you detail the general goal to be more feasible and achievable.
S.M.A.R.T. Goals: Specific, Measurable, Attainable, Realistic, and Timely.
5W2H: What + Why + When + Where + Who + How + How much.
Goals are used to track the performance and the process of the company, so they should be set as more detailed as possible during strategic planning. For example, “Increase the ROI by 8% in 4 months” or “Increase the market share from 12% to 16.5% in 12 months”.
Companies using this strategy should find out areas that customers care about through assessing the market. Thus, they can pay their attention to improving these fields compared to their competitors. The company can focus on the quality, style, performance, and other functions to differentiate the product and service.
Cost leadership strategy
This strategy focuses on minimizing the production cost and the sales cost to compete with rivals at a low product price and to win the market share.
Cost optimization strategy
The company will combine the strategy of cost leadership and differentiation to offer more value or service to customers with the same price. The purpose of this strategy is to compel the product has more advantages in price and cost compared to rivals’.
Market concentration based on cost leadership
The company will focus on several segment markets and offer these markets a product with a lower cost and price to compete with rivals.
Market concentration based on differentiation
The company will also focus on some segment markets and know about the requirements of these segment markets. This way, the company can offer a product different from its competitors’.
Each of these five strategies can help the company gain a market status different from other four. But whichever strategy a company is using, the manager must notice the following events:
- The strategy should be feasible. It will not be achieved if the requirement is beyond the resources the company belongs.
- The strategy should be well-matched with the goals. The strategy will not be available if the goals conflict with each other.
- Never underestimate the responses of the competitors. They are the most dangerous when they are under threat.
- Avoid using inflexible strategies. Those strategies will lock the company and eliminate the buffer when responding competitors’ activities.
- When using the differentiation strategy, a small difference might be noticed by consumers. Thus, the company should do better to improve their product and service to differentiate from rivals’.