7. Dynamic Balancing of Your
Business Wheel
Customer Innovation
If your
business
wheel is
STRATEGY unbalanced,
it will roll
neither far
nor fast.
Finance Processes
More information at 1000ventures.com:
“Balanced Approach to Business Systems”
16. Articulate Your Vision
"Leaders inspire people with clear visions of
how things can be done better." The best
leaders do not provide a step-by-step
instruction manual for workers. The best
leaders are those who come up with new idea,
and articulate a vision that inspires others to
act.
Create and project a clear vision
Articulate a few clear stretch goals for your
company
Make sure you have the very best people to
carry your vision out.
More information at 1000ventures.com: “Vision, Mission, Goals”
17. Examples of a Corporate Vision
GE We bring good things to life.
Ford To become the world's leading consumer company for
Motor Co automotive products and services.
Microsoft To enable people and businesses throughout the world to realize
their full potential.
19. MenaItech Vision
To provide the highest quality and
most comprehensive enterprise level
HR solutions that fit the MENA
region’s requirements, utilizing the
latest technologies and best HR
business practices
20. Mission
Peter Drucker: -- Think through
the overall mission of a
business. Ask the key question:
“What is our Business?”
21. Mission Statement
• Purpose/reason for organization
• Promotes shared expectations
• Communicates public image
• Who we are; what we do; what
we aspire to
22. MenaItech Mission
To provide HR solutions that maximize
the return on the human capital
investment for all MenaITech
customers by providing accurate and
reliable management information,
improving access to information, and
reducing costs of operating the HR
solution.
23. Long-term Objectives
Mission-driven pursuit of specified
results more than one year out
24.
25. Long-term Objectives
Essential for ensuring the firm’s
success
• Provide direction
• Aid in evaluation
• Create synergy
• Focus coordination
• Basis for planning,
motivating, and
controlling
27. The Three Hierarchical Levels of Strategy
Corporate
Strategy
Business you should be in
Business Strategy
Tactics
to beat the competition
Functional Strategy
Operational methods
to implement the tactics
More information at 1000ventures.com: “Enterprise St
28. The Organization Life Cycle
Introduction Growth Maturity Decline
stage stage stage stage
concentration Integration Diversification Retrenchment
Industrysales
Revenue
0
Industryprofits
Time
30. Competitive Strategies
– producing and marketing a good quality
Cost Leadership product or service at a lower cost
than your competitors.
– creating a product or service that is
Differentiation perceived as being unique
"throughout the industry".
– addressing a "focused" segment
Focus of the marketplace, product form or
cost management process
Source: “Competitive Advantage”, Michael Porter 1000ventures.com
35. Strategic Management
achieves a firm’s success
through integration ––
Management Marketing
Finance/Accounting Production/Operations
Research & Development MIS
36. Strategy implementation
Most difficult stage
Mobilization of employees &
managers
Interpersonal skills critical
Consensus on goal pursuit
37. Strategy Implementation
Success Rates and Major Impeding Factors
Planned implementation according to
100%
strategic plan
Actual implementation as reported by
50%
managers themselves
Actual implementation as estimated by
10%
outside observers
Adapted from “Strategic Management”, Alex Miller, 1998 More information at 1000ventures.com: “Strategic Mana
39. Strategy Evaluation
Final Stage of Strategic Management
Subject to future modification
Today’s success no guarantee of future
success
New & different problems
Complacency leads to demise
40. And In Conclusion:
Plan-Do-Check-Act
.P. considers both the preplanning and
strategic planning processes;
.D.encompasses both the deployment
and implementation of the plan;
.C. tracks progress, measures results
and outcomes, and evaluates all
three.
.A. feeds the evaluation back to the
system and either adjusts or
standardizes the system based upon
that feedback.
49. Strengths & Weaknesses
(Internal)
Typically located in functional areas of the firm
• Management
• Marketing
• Finance/Accounting
• Production/Operations
• Research & Development
• Computer Information Systems
• Culture
• Structure
51. SWOT Analysis
Internal External
Build on STRENGTHS Exploit OPPORTUNITIES
• What is your competitive advantage? • What trends may impact your business?
• What are your core competences? • How can you exploit external changes?
• What are your distinctive capabilities? • How to turn problems into opportunities?
• Other strengths • Other opportunities
Revolve WEAKNESSES Avoid THREATS
• What are your weak point? • What obstacles do you face?
• What problems do you have? • What your competitors could do?
• What necessary expertise do you lack? • What could damage your business?
• Other weaknesses • Other threats
1000ventures.com
52. A word of caution,
SWOT analysis can be very subjective. Do
not rely on it too much.
Two people rarely come-up with the same
final version of SWOT.
TOWS analysis is extremely similar. It
simply looks at the negative factors first in
order to turn them into positive factors.
So use it as guide and not a
prescription!
53. Simple rules for
successful SWOT analysis
be realistic about the strengths and weaknesses of your
organization
analysis should distinguish between where your organization
is today, and where it could be in the futures
be specific. Avoid grey areas.
always analyse in context to your competition i.e. better
than or worse than your competition
keep your SWOT short and simple. Avoid complexity and
over analysis
SWOT is subjective.
63. Porter’s Model
Factors That Determine Competitiveness Within an Industry
New entrants
Threat of new
entrants
Bargaining INDUSTRY
power of COMPETITORS
suppliers
Suppliers Buyers
Bargaining
Intensity of rivalry power of
buyers
Threat of
substitutes
Substitutes
Source: “Competitive Strategy”, Michael E. Porter 1000ventures.com
64. Analysing the environment -
Five Forces Analysis
Five forces analysis helps the marketer to
contrast a competitive environment.
65. The threat of entry.
Economies of scale.
The high or low cost of entry
Ease of access to distribution
channels
Cost advantages.
Will competitors retaliate?
Government action
How important is differentiation?
66. The power of buyers
This is high where there a few, large
players in a market
If there are a large number of
undifferentiated, small suppliers
The cost of switching between
suppliers is low
67. The power of suppliers
The power of suppliers tends to be a
reversal of the power of buyers.
Where the switching costs are high
Power is high where the brand is powerful.
There is a possibility of the supplier
integrating forward
Customers are fragmented (not in clusters)
so that they have little bargaining power
68. The threat of substitutes
Where there is product-for-
product substitution
Where there is generic
substitution (competing for the
currency in your pocket)
We could always do without e.g.
cigarettes.
69. Competitive Rivalry
This is most likely to be high where
entry is likely; there is the threat of
substitute products, and suppliers and
buyers in the market attempt to
control.
This is why it is always seen in the
centre of the diagram.
70. Financial Analysis
Financial Ratios are Important –
–Ration Analysis
•Liquidity ratios
•Profitability ratios
•Activity ratios
•Leverage ratios
71. Financial Analysis
Basic Steps
1. Historical income statements/balance
sheets
2. Compare historical statements over
time
3. Calculate changes individual items-
cumulative
4. Change as percentage and absolute
amount
5. Adjust for inflation if significant factor
72. Altman’s Bankruptcy Formula
Z = 1.2x1 + 1.4x2 + 3.3x3 + 0.6x4 + 1.0x5
where
x1 = Working capital divided by total assets.
x2 = Retained earnings divided by total assets.
x3 = Earnings before interest and taxes divided
by total assets.
x4 = Market value of equity divided by total
liabilities.
x5 = Sales divided by total assets.
Z = Overall index of corporate fiscal health.
73. Altman’s Bankruptcy Formula
Z<1.81 significant credit Problem
Z>3.00 Healthy Organization
1.81<Z<3.00 ?????????????????
76. Overview & Current Situation
The largest retailer, discount store chain in the world
(Sales $345 b 2007 FY & 1.9 m associates)
Global company since 1991 (2007 > 6,700 stores)
Masters of Cost leadership Strategy
Three operating SBUs
77. SBUs growth & Percent of total sales
Wal-Mart
Wal-M Stores Sam’s Club
International
% Total % Total % Total
No No No
Sales Sales Sales
2007 3443 65.6 % 579 12.1% 2757 22.3%
2006 3289 67.9% 567 12.9% 2181 19.2%
2005 3151 68.1% 551 13.2% 1480 18.7%
% No
increase 9.3 5.1 86.3
2007/2005
79. Current Financial Performance
Net Sales $b CSSI*% Stock price
2002 201.2 6 56.98
2003 226.5 5
2004 252.8 4
2005 281.5 3
2006 309 3
2007 345 2 46.37
*CSSI: Comparable Store Sales Increase in USA
80. Recommended Strategy
1. Growth (USA) via related (concentric) Diversification with
Focused Horizontal Growth portfolio (outside USA) via:
a- Internal development of new stores type (high quality
up-scale goods, image & profits) to fit urban locations
b- Acquisition of local chains (having such image or
specialty chains)
c- Focus locations portfolio choice (Expand in NA, China,
India & Slow growth in Europe)
b- Establish JV (instead of Acquisition)
83. “What we think, know, or believe in is,
in the end, of little consequence. The
only consequence . . . is what we
do..”
(Haines, 1995)
84. What is a Business Plan?
A business plan is a written
description of the goals and
objectives of the business and how
they are going to be achieved. It
includes the mission of the business
along with the production,
organizing, marketing, and financing
intentions.
85. Why need Business Plan?
1. To Map the Future
2. To Support Growth
and Secure Funding
3. To Develop and
Communicate a Course of
Action
4. To Help Manage Cash
flow
5. To Support a
Strategic Exit
86. PLAN YOUR PLAN
Believe it or not, part of planning
your plan is planning what you'll do
with it
87. PLAN YOUR PLAN
Do you intend to use your plan to help you
understand your organization situation?
Do you intend to use your plan to help you
raise money?
Do you intend to use your plan to start up
new Business?
Do you anticipate showing your plan to suppliers
to demonstrate that you're a worthy customer?
88. Do you need to an estimate of your start-up costs?
Do you need to make revenue estimate (by defining your
market -- who your customers will be -- and the percentage of
the market you can expect to reach)?
Do you intend to use your plan to
attract talented employees?
91. How Effective Is the
Business Plan?
How effective a Business Plan is depends
on how well the following questions are
answered:
Who are we?
What do we do?
What do we have to offer?
Why will someone pay for our
products/service?
What resources do we have?
Where are we going?
What do we need to get there?
Why will we be successful?
Why should someone participate or invest?
How will we measure performance?
92. Key Components of a Business
Plan
The business plan covers areas:
1. Executive Summary
2. The Industry, the Company, and the Products
3. Market Research and Analysis
4. Marketing Plan
5. Operating Plan
6. Management Team
7. Financial Plan
93. Executive Summary
Always “ Leave it until the End”
1. Business name
2. Business Location
3. What Product or services you
sell
4. Purpose of Plan
94. The Industry, the Company, and
the Products
This section of the business plan
describes the business venture in a
detailed but concise manner. You
must clearly describe:
The nature of the industry
The proposed business
The product the business
plans to offer
95. The Industry
Present the current status and outlook for the industry in
which the business will operate.
New products and developments
New markets and customers
General trends affecting the business
Identify sources of information used to describe trends
96. The Company
Write a detailed description of the proposed
business venture, the products and services it
will offer, and the principal customers.
Mission statement with goals and objectives
Ownership and legal form of the company
Reasons why the business will be successful
97. The Products or Services
Describe in detail the products or services to be sold, as
well as the application of the product or service.
Benefits to the customers
Competitive advantages
Unique features
Current state of development
98. Market Research and Analysis
This section of the business plan presents enough facts
obtained through market research and analysis to
determine if the product or service has a substantial
market in a growing industry despite a competitive
market.
Customers
Market Size and Trends
Competition
Market Share and Sales
99. Types of Market Research
PRIMARY RESEARCH = DO IT YOURSELF:
Observation
Surveys
Interviews
SECONDARY RESEARCH = USE EXISTING DATA:
Public Library
College or Universities
Chamber of Commerce
Business Publications
Trade Shows
The Internet
Census Information
Sales Tax Data
100. Types of Market Analyses
The information obtained through primary and
secondary research techniques can be analyzed in a
variety of ways.
Economic Trend Analysis
Political and Social Analysis
Customer Analysis
Market Potential Analysis
Competitive Analysis
101. Customers
Identify your target market and develop a
customer profile.
Demographic profile
Lifestyle patterns
Expectations
102. Competition
List the strengths and weaknesses of competitive
products and services and list the companies that
supply them.
Identify and list current and future competitors
Assess the competition on the basis of price,
quality, performance, service, etc.
Discuss advantages and disadvantages of
competing products or services
103. Market Share and Sales
Summarize what it is about your product or
service that will make it sell in the face of
current and future competition.
Identify and list major customers and
estimate potential sales
Estimate share of the market
Estimate sales in units and dollars for the
next two to five years
104. Marketing Plan
This section of the business plan describes the company’s
marketing goals and objectives and how they will be
achieved.
Overall Market Strategy
Pricing
Sales Tactics
Advertising and Promotion
Packaging
Marketing Plan Outline
105. Overall Market Strategy
Describe the general marketing philosophy and strategy
of the company.
Derived from market research and analysis results
Include discussion of markets targeted for sales
promotions
List short-term and long-term marketing objectives
Discuss specific marketing tactics
106. Sales Tactics
Describe specific actions that will be taken to generate sales and
distribute the product or service to customers.
Analyze effectiveness of everything available within the
sales system
List channels such as salespeople, agents, dealers, and
direct mail services
Describe methods that will be used to distribute products
to customers
Describe merchandising techniques
107. Advertising and Promotion
Describe approaches the company will use to
bring the product or service to the attention of
the target market.
List advertising methods along with benefits
and costs
Discuss promotional efforts and strategies
Publicity
108. Marketing Plan Outline
A marketing plan outline is a useful tool for pulling together
information related to the marketing plan. The marketing plan
outline should include information on the following:
Marketing situation
Marketing objectives
Marketing Strategies
Budget
Action plan
Evaluation
110. Financial Plan
•Important Assumptions
•Key Financial Indicators
•Break-even Analysis
•Projected Profit and Loss
•Projected Cash Flow
•Projected Balance Sheet
•Business Ratios
111. What to Avoid in Your
Business Plan
Place some reasonable limits on long-
term, future projections. (Long-term
means over one year.) Better to stick
with short-term objectives and modify
the plan as your business progresses.
Too often, long-range planning
becomes meaningless because the
reality of your business can be
different from your initial concept.
112. Avoid optimism.
Do not ignore spelling out what your
strategies will be in the event of
business adversities.
Use simple language in explaining the
issues.
Make it easy to read and understand.
Don't depend entirely on the
uniqueness of your business or even a
patented invention.
113.
114. What are the key steps to
preparing Action Plan?
Step 1.
Take (you're Targets of Financial,
Marketing, Sales…) , Group
strategies and tactics.
Detail the activities necessary to
achieve each outcome.
115. What are the key steps to
preparing Action Plan?
Step 2: Create an action plan, An action
plan has five elements :
1. Outcomes
2. Activities
3. Resources
4. Responsibilities
5. Timeline
116. Step 3 :For each activity identify
resources, responsibilities and timelines.
Step 4: Review your plan.
Step 5 :For each year or new project
create a new action plan.
117. You're Action Plan is SMART,
How?
Specific
Measurable :
Achievable:
Realistic:
Time specific :