Index | Parent Index | Build Freedom: Archive

THE KEY AREAS IN WHICH YOU CHOOSE TO COMPETE

In completing your competitive analysis, you developed a picture of your competition and your strengths and weaknesses versus what they could offer. Now you have to make some tough choices.  Previously, we listed twelve areas of wants or needs customers have. These are also the areas in which most companies compete.  But no company can compete in all twelve areas. You will be forced to narrow your areas of competition to no more than five or six. But how do you narrow your selection?

The best place to start picking the key areas in which you choose to compete is with your strengths. Look closely at what you do well versus your competition. In developing your strategy, what you want to do is to build upon your strengths, since they represent your advantages. For example, you may find that one of your strengths is benefit/value - your costs are high relative to your competition, but you deliver a lot of value for the money and, most important, your "ideal" customer prefers value over low cost.

Benefit/value then becomes an area in which you will compete and directs you to plan to maintain or enhance the "added value" of the products/services you offer. By picking your strengths first, you will find it easier to identify other areas in which you should compete.  For example, if benefit/value is one of your strengths, then uniqueness/novelty may be another key area in which you will choose to compete. Why? Because you probably need to offer something unique or novel to command a higher price. In fact, if
your customers prefer benefit/value to low costs, they probably also seek products or services that are - to them - unique and novel.

Your Key Capabilities
Once you have decided upon the key areas in which you choose to compete, your next step is to identify the key capabilities your business must have. Key capabilities include such things as:
• A particular technology
• A body of knowledge or skill
• A production capacity or capability
• A marketing capability
• Distribution channels
• Raw materials
• Financial resources
• Human resources
• In Formation or information systems

Ask yourself, based upon what you know about your mission and how you have chosen to compete, what level of capability you need in each of these areas to be successful. What level of capability do you currently have? And what will it cost to add capability you are missing?

Assessment of Return/Profit
Having completed your analysis to this point, you are now ready to complete the numbers/financial section of your plan. You know your "ideal" customer. Now think about the size of your customer base. How big is it? Is it growing or shrinking? You know your competition and potential competition.  What share of the market are they likely to consume? What share can you hope to retain or take from then?  You know the key capabilities you will need to carry out your plan. What will it cost you to acquire and retain these capabilities? As you working these numbers, prepare three scenarios: your best-case assumptions, your worst-case assumptions; something in between. Then review the results.  If your worst-case assumptions won't generate the minimum profit, cash flow, and return on investment you need, then you must rethink your strategy or, at a minimum, develop a contingency plan. What would you do if the worst case happened?

Plan for Communicating and Implementing Your Strategy
Up to this point, you have developed a plan. But it is only a plan. It is only wishful thinking unless you take action. To ensure that you do take action, you need a list of things to do. One thing you must do is communicate your plan to your employees. At a
Minimum, you need to prepare a summary of your business strategy you can distribute to your employees and hold a meeting with your employees and discuss your business strategy. Once you have communicated your strategy to your employees, your next step should be to draw up a plan for implementing that strategy. Your implementation plan should be a written list of what needs to be done, who will do it, and by when the task will be completed. For example, you may have identified a new technology as a key capability you must have to carry out your strategy. How are you going to obtain that technology? Who will contact vendors? Who will secure financing? By when will these steps be completed? In developing this implementation plan, involve your people. Call a meeting and say: "The last time we met, I reviewed our business strategy. Now we have to decide how we will implement that strategy. And I need your ideas." Brainstorm with them the actions you need to take. They'll go out of the room with a clear idea of what needs to be done to make your business a success. More important, because you involved them in the process, they will be personally committed to action.

Previous | Contents | Next

Index | Parent Index | Build Freedom: Archive

Disclaimer - Copyright - Contact

Online: buildfreedom.org | terrorcrat.com / terroristbureaucrat.com