Strategic Business Planning Model
The SWOT model of strategic business planning identifies a company's strengths, weaknesses, opportunities and threats. Assessment of strengths and weaknesses occurs internally by identifying those things a business does well and those it does poorly. Identification of opportunities and threats happens externally by analyzing the business environment. A good strategic plan capitalizes on the company's strengths and opportunities, while minimizing the impact of its weaknesses and threats.
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Management Team
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If more than one person manages the company, those that make high-level decisions--the owner/founder, the general manager and managers of functional areas such as operations, accounting and human resources--should gather at least one day per year for SWOT analysis, with attendees speaking their minds without fear of reprisal. A qualified facilitator can help the group stay on track and navigate its way through tough issues.
Strengths
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Members should identify and list the company's main strengths as compared to its competitors. Strengths include resources or capabilities that make the company able to perform better than other similar companies. For example, access to better coffee bean suppliers counts as a strength for a coffee shop, while a software firm would consider employing world-class programming engineers a strength. Strengths should be objectively verifiable--hard-to-imitate strengths contribute the most to competitive advantage.
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Weaknesses
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The decision-makers should focus on resources and capabilities that keep the company behind its competitors. They can easily remedy some weaknesses, such as cleanliness, while others present challenges, such as a poor location. An honest assessment of weaknesses facilitates building a more competitive firm. Feedback from customers and experts in the industry can enhance objectivity.
Opportunities
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Opportunity analysis looks forward, as members think about what products and services customers will want in the future, and identify any needs currently unmet. Employees stay on top of trends in the industry by reading trade journals and visiting industry-related websites. Companies that foresee changes in what customers want--and how to make and deliver it--have an advantage over those that remain stuck in the present, and should focus on the opportunities that play to their strengths.
Threats
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By listing those things in the business environment that present the most immediate danger to the business, companies can identify those that may become dangerous in the future. Common threats include new competition, changes in technology, and unfavorable laws and regulations. For example, video rental stores face extinction from Internet downloads of movies. For each threat, companies should construct a most-probable and a worst-case scenario.
Application
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After conducting a SWOT analysis, a three-year strategic plan should focus the company's efforts on opportunities that play to its strengths. Niche markets, rather than large markets where many players battle for dominance, make it easier to compete. Companies should do their best to correct cost-effective weaknesses subject to their control. For example, it would almost always pay to raise standards of cleanliness, but it rarely makes sense to remodel every store. Employees should neutralize threats when feasible, such as keeping a sufficient cash cushion to survive unforeseen catastrophes.
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References
Resources
- Photo Credit echecs image by Marco Sgarbi from Fotolia.com
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Comments
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execute one pilot project then see how it goes for mass plan??
