Developing Winning Business Strategy

Developing Winning Business Strategy
How to define your company's place in the world,
and shape the world's view of your company.
Simmons Performance Solutions
Strategic Insight to Power Growth

Key Issues
1. Defining your company
2. Industry analysis
3. Market Analysis
4. Strategic design
5. Strategic Mapping

Effective business
strategy means
identifying
a path to occupy
achievable space.

Plotting your company’s
path takes a clear view
of the space you wish to
occupy, and the
obstacles in the way.

Internal
development
shapes how others
view your
company and its
products.

Never forget that the
competition gets to
make moves as well.

How does an industry and its market
come together to create opportunity?

Strategy Design Template
Industry Market
O
p
p
o
r
t
u
n
i
t
y
• Products
• Inputs/ Technology
• Cost Structure
• Trends/Velocity
• Partnerships
• Customers
• Demand
• Cycles
• Channels
• Alternatives

The Strategic Design Template identifies areas where an
industry and the markets it serves converge to create
seams of opportunity.

Inputs &
Technology
Cost
Structure
Industry
Dynamics
Trends/Velocity
Products
Partnerships

Product Analysis
Industry analysis starts with knowing your competition
and the solutions they offer the market.
• What products or services are being offered?
• How are the products meeting the market’s demands?
• What market segment are they targeting?
•What are the core points of differentiation?
• Do they come with attachments to increase attractiveness?

Inputs & Technology
Access to inputs and technology dictate how and at what cost a product /service
can be developed or produced. While the stage of development drives this analysis.
Development Stage
• R& D capability
• Talent development
• Supply chain development
• Quality Control Standards
Production Stage
• Supply chain management
• Operational efficiency
• Logistics standards
• Forecasting

Cost Structure
To be profitable you must be able to control cost. Analysis of
Your cost structure must include a an understanding of:
• Financing and investment sources and their expectations.
• Development cost and payoff estimates.
• Market development and customer acquisition cost.
• Procurement, supply chain, and distribution cost.
• Talent development and retention cost.

Trends/Velocity
Product trends and velocity tell you how quickly product standards evolve.
Concerns in this area are:
• Where are the offerings in the product life cycle?
• How are cost trending?
• Is the industry offering product proliferation?
• What point is the industry at in its life cycle?

Partnerships
Partnerships play an intrical role in industry dynamics and can answer
critical questions.
• Is a company looking to expand its customer base, and market share?
• What are RD cost which effect innovation?
• Has the industry reached maturation and it is now consolidation?
• What product complements are helping to capture market share?
• Is industry velocity increasing or slowing?

Industry Analysis
Each of the five is important
in its own right, but a clear
understanding of their
relationships and how they
operate as a unit is vital to
the strategic planning
process.

Demand&
Trends
Cycles
Consumers
Channels
Market
Dynamics
Alternatives

Consumers
The consumers and their wants are central to the strategic plan. A company
must be clear in who it provides a solution for.
• What solution is the customer base calling for?
• Is the customer base define?
• How large is the customer segment and is it growing?
• Can the customer segment be broken down into subgroups?
A company must not limit its growth by merely focusing on a product's
intended customer base, it should identify markets with similarities where
the product can gain acceptance.

Demand & Trends
The size of the current consumer base is not enough to justify market entry.
Companies must look at how the customer base is trending, and how things
which effect or influence purchasing are trending.
• Is there a growth rate associated with the target customer group,
and is it associated with a growing demographic.. i.e.. Aging population?
• Are prices declining due to increasing competition or other factors?
• Is there a seasonality to sales which can be leveled off?
• Are sales channels evolving at a rapid rate?

Cycles
There internal and external cycles which are extremely important when
deciding on entering a market
• What is the sales cycle?
• Is there a seasonality to the product or market?
• What stage are competing product at in there product life cycle?
• Is the market fully developed?

Channels
Every company must address how their product reaches potential
customers. Channel analysis must answer:
• Are there existing sales and distribution channels?
• What stage is the distribution channel mature and dependable?
• Is the leverage within a channel which effects bargaining power?
• Can the distribution channel be disrupted?

Alternatives
Competition does not only come from within an industry. Other industries
offer alternatives which must be taken into account. These substitute
products diminish the bargaining and pricing power of a company and its
industry companions.

Market Analysis
Market analysis should go beyond merely looking at the size of a
customer base. It should also look at the elements which create the
market landscape. To do so it must include an analysis of the
customer base, trends, cycles, channels, and alternatives.

Industry and market analysis give us the answers
needed to identify the seams of opportunity to develop
our strategic roadmap.

Making Strategy Work
Example One
Industry Market
Low cost structure Large and increasing customer base
Few competitors Few sales channels
low product development trends Increased buyer bargaining power
This represents a high probability of diminished profit margins., and would not be an
attractive market for a premium goods supplier. But a high volume low cost provide who
could thrive on razor thin margins would do well in this scinerio.

Making Strategy Work
Example Two
Industry Market
High velocity due to a rapidly evolving industry Large and increasing customer base
High but manageable cost structure Many alternatives
Slow product development trends Disruptive distribution channels
Quick sales cycles
In this scenario a company can adopt a market leadership or premium supplier strategy
where it can target early adopters who are willing to pay a premium for innovative
products. This strategy will enable the company to realize greater profit margins while
setting market and industry standards.

Implementation of Strategy
Once the analysis is complete and a strategy is settled on the
implementation process begins by identifying internal needs and developing
the following processes.
• Strategic roadmap- the process for occupying the identified space.
• Tactical plans- internal processes to support strategic initiatives.
• Define process goals and inflection points.
• Indentify key performance indicators to measure success.
From here any business can roll out the tactical initiatives to support the
identified business strategy which the industry and market can support with
effective execution.

Setting Objectives
The chart below demonstrates how the company development process works from the top
down starting with company wide strategy then down to functional level tactics that position
the company to fulfill operational goals.
Company wide Low Cost Provider Premium Supplier
Strategic initiatives Sell through mass market
retailers at lower cost
Offer high quality premium
product
Operational objectives Efficient mass production
and distribution
Obtain high quality inputs,
lower defects, effective
placement
Tactical objectives Inventory management, cost
management practices,
efficient acquisition and
distribution practices
Quality control process,
premium placement
Once the objectives are aligned with initiatives then goals can be identified. These goals
become milestones to use with the strategic mapping process.

Strategic Mapping
The strategic map is a representation of the process that moves the company
from its current to a future state to:
• Allow for the development of high level business capabilities in order to fulfill
strategic objectives over time.
• Monitors business outcomes as they relate to the identified strategic
objectives.
• Links objectives to Key Performance Indicators
• Signals changes in process improvement, technology, and external initiatives.
• Identifies accounts for top level risk.

Developing Winning Business Strategy

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