Excerpt
BUSINESS STRATEGY
What is Strategy?
Strategy is a proactive way of thinking that builds on your strengths, looks ahead, and develops a network of business relationships. It incorporates a plan of action where you assess your environment, evaluate your resources, and formulate or propel your actions for the future (see Fig. 1).
For the desired results to be achieved, a structure of functionality must be developed. This should include or incorporate systems, procedures, and yardsticks for resource optimization, accountability, and control measures.
Previously, companies achieved their goals alone; they took initiatives and risks solely by themselves against all odds and cost implications. Now, a new era has emerged where corporate objectives are achieved through partnerships and cooperation, also known as the strategies of alignment, linkages, and collaboration (see Fig. 2).
Environment
Due to accelerated competitive activity and market dynamisms, companies must think faster to reinvent the wheel at all times. The development of the Internet or the World Wide Web, which created hypercompetitive environments, has caused businesses to think outside the box at all levels and times.
Product lifecycles are becoming shorter and shorter. Auto manufacturers like BMW and Daimler Chrysler, which previously developed models or brands five years apart or more, are now churning out products within short periods.
In today’s knowledge economy or environment, we need to identify grey areas (markets) and opportunities in order to strike the right balance between serving price-sensitive and service-sensitive customers.
If sixty percent of the world population lives in Asia and forty-five percent of all technological products are manufactured in Asia, this should tell us something about the Asian business environment.
Potential and viability, opportunity and growth and the emerging market or the day.
Every business takes its cue from the environment, but every organization sees the environment differently. Because of this, every organization satisfies it differently. If this is so, how can all consumer goods manufacturers ensure that every grocery store or supermarket stocks all their items? The remedy is different for everyone. Every business is like a physician; they may diagnose a situation differently, but there should be an acceptable form of treatment to stay healthy or alive.
Our differences in understanding, our differences in analysis, and our differences in implementation make us win or lose. We all make choices and decisions, yet not all the decisions turn out the way we want. What makes things better or acceptable? The same thinking must apply to:
– understanding people and markets – – understanding the differences in application
The Wakeup Call
Sometimes, after long periods of preoccupation, stagnation, and administrative bottlenecks, companies start experiencing drastic drops in sales and fierce breakthroughs by a competitor’s product.
This calls for a new set of priorities in reviewing one’s business environment. More analysis must be done on the environment for market potential, opportunities, threats, new product ideas, and business cycles.
The criteria for every business model or plan are dictated at the marketplace. However, it requires evaluation and carefully planned analysis to see the criteria.
Internal Resources or Capacity Evaluation
-human capital
-intellectual property
-knowledge assets evaluation
-business structure
-internal systems
-intellectual capital and knowledge
Human Capital
Traditionally, companies paid more attention to cash or finances and their physical assets. Adam Smith once said, “The wealth of nations depends on its economic resources.” As the resources cannot manipulate themselves into existence but require human thinking, companies are paying more attention to their employees and human capital needs. Changes in the way human resources are managed should be driven by strategic initiatives.
In today’s business environment, all information is available to everyone, yet we all use the information differently. To be precise, we all put different emphasis and importance on the same information, making some businesses more successful than others.
Sometimes, businesses lack the capacity and are not in a position to make intelligent decisions or choices, and the results at the marketplace reflect their ignorance and failure to compete effectively.
Every company needs people who will bring their expertise to deeper levels, which is what the business model requires (mission, value, performance, and so forth). The greatest limitation to growth is the availability of talented leaders. They can be developed, but the starting point is crucial, from recruitment and training to management development, and from succession planning and performance evaluation to rewarding systems.
Knowledge Assets Management
To build digital capital relationships, knowledge must be integrated into business strategy.
Companies must coordinate front-end and back-end operations for effective and total satisfaction of customer needs and requests as well as order processing, sales, deliveries, receivables, payments, cash report generation, warehouse space utilization, and a total logistics budget.
Companies must also be able to share information and perform collaborative activities, focusing on content and support services. The strategy will be incomplete until the last customer or all customers, both internal and external, are satisfied.
Government-granted monopolies, patents, and copyrights must be harnessed into marketable products for continuous growth.
New Business Structure
Business dynamics, or market inertia and changes, have called for new thinking in various business structures to support the new competitive challenges. Different structures and new behavioral thinking must coexist to make the organization more effective. The organization of today will consist of new management skills, new systems, and a culture that encourages change and innovation.
“The new organizational structure will prioritize and support these strategy related activities which enhances efficiency, reduce costs and promote collaboration and cooperation,” says Rigsby and Greco in Mastering Strategy.
Intellectual Capacity Planning
* Find your knowledge assets * * Identify your value creation base (infrastructure, internal procedures, *customer base and expertise) * * Manage your knowledge and value creation systems
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