Friday, June 22, 2012

Strategic Planning for Small Business


Strategic Planning – refers to the process of determining the major objectives of an organization and defining the strategies that will govern the acquisition and utilization of resources to achieve these objectives.

Components of the Strategic Management Process:

1.       Strategic planning which consists of:

a.        assessment of the organization strengths, weaknesses, opportunities, threats. SWOT
b.       formulation of organization mission
c.        formulation of  organization philosophy and policy
d.       determination of strategic objectives
e.        determination of organization strategy

2.        Strategy implementation and control which consist of:

a.        implementation of organizational strategy
b.       control of organization strategy

Applicable Strategies

1.       Entering a New Business

a.        Acquisition of an existing business
b.       Ordering a new business entity
c.        Franchise

2.       Going Concern

a.        Segment Markets – Identify the market segment with which it has an expertise. Then compete.
b.       Efficient use of Research and Development – it must concentrate its R & D efforts to lowering process costs or to bring new products to the market.
c.        Think Small – The emphasis must be on profits rather than sales growth, and specialization rather than diversification.

3.       Meeting Competition of Big Companies

a.        Concentrate on narrow market segments that big business do not want to exploit.
b.       Localize the business. Ex. Pampanga dishes, Mindoro delicacies.
c.        Stress “Personal Touch”- the small business operator can be more close to his clients, build favorable image and get more business.

Why Small Business Operators Ignore Strategic Planning:

1.       Lack of expertisefew small business operators are trained in strategic planning.
2.       Inability to get started – failing to get started in planning for lack of sufficient exposure to planning activities.   
3.       Uncontrollable, often intangible, variables – these variables complicate planning which later on discourages the small business operator from repeating the exercise.
4.       Resource poverty – planning requires time, but the small business operator oftentimes does not have it; this is because he must attend to problems related lack of adequate capital, managerial experience, and other key assets.
5.       Focus on daily operations – the daily requirements of small business usually keeps the operator so busy that he has no time for planning.
6.       Failure to realize the importance of strategic planning – the small business operator is exposed to an environment of successful businessmen who never do strategic planning. This provides them with sufficient reason to disregard strategic planning.































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