Strategic Planning For Today

By CEI Compliance
Strategic Planning For Today
Lee Werrell CEI Compliance Limited
ByLeeWerrellFInstSMMCharteredMCSICertPFS
Typically, IFAs and business managers are often so preoccupied with regulatory issues, business demands and time pressure issues that they lose sight of their ultimate business objectives. With major landscape shifts on the horizon with the RDR, move of the FSA to the CPMA as well as the backdraft of the banks financial crisis and governments austerity combating measures, is precisely where a facilitated business review for the preparation of a strategic plan is a virtual necessity. This may not be a recipe book for success, but without clear direction, planning, awareness of external impacts as well as internal crises, a business is much more likely to fail. The support you receive from CEI Compliance Consultancy is targeted at corporate development, corporate strategy planning, strategic management and strategy consulting and will involve the following. Planning: strategic thinking and strategic business planning identify where the new opportunities lie. Positioning: Strategy consulting gives your company the insight to be perfectly placed to exploit each opportunity to the full. Process: putting in place a strategic management process ensures that your company is constantly primed to use events to its best advantage. As the cat in Alice in Wonderland states; If you dont know where you are going, it doesnt matter which road you take. A sound plan should: Serve as a framework for decisions or for securing support approval Provide a basis for more detailed planning. Explaining the business to others in order to inform, motivate & involve Assist benchmarking & performance monitoring Stimulate change and become building block for the next stage Your strategic plan should not be confused with a business plan. The former is likely to be a short document whereas a business plan is usually a much more substantial and detailed document. A strategic plan can provide the foundation and frame work for a business plan, providing vision and identify the gaps and obstacles that the business plan needs to address. A strategic plan is different from an operational plan. The strategic plan should be visionary, conceptual and directional in contrast to an operational plan which is likely to be shorter term, tactical, perimeter focused, implementable and easily measurable. As an example, compare the strategic process of planning a holiday
Strategic Planning For Today December 2010
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(where, when, duration, budget, who goes, how travel are all strategic issues) with the final operational preparations (tasks, deadlines, funding, weather, packing, transport and so on). Some Consultancys will use systems and processes that are common sense but have a catchy acronym such as a M.O.S.T. analysis (Mission, Objectives, Strategies & Tactics) and try to impress you with the structure of the logic. The key to success is not to have a catchy name or fancy logic dressed up as some sort of panacea, but for a practical, robust and meaningful plan to be formulated based on the unique and precise needs of YOUR business. There is no one size fits all answer to strategy planning and there are no quick wins. For this whole process to hang together you need a systematic, objective overview and you need to ensure that every part of the process locks into place, so that your whole business moves forward in an integrated and effective way. A clear, carefully stepped corporate strategy invigorates your business, energizes your team and puts your long-term goals within you and your teams reach Basic Approach to Strategic Planning Strategic management is a crucial element in keeping your business firing on all cylinders and driving forward. But where can you find the time, the perspective or the expertise? Working with you, your business plan and your vision, a facilitator can help provide that essential strategic management understanding and experience to help you stand back; evaluate; then move forward. A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and predisposition. Some essential points which should to be observed during the review and planning process include the following: Relate to the medium term i.e. 2/4 years Be undertaken by owners/directors Focus on matters of strategic importance Be separated from day-to-day work Be realistic, detached and critical Distinguish between cause and effect Be reviewed periodically Be written down, recorded and reviewable
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As the precursor to developing a strategic plan, it is always desirable to clearly identify the current status, objectives and strategies of an existing business or the latest thinking in respect o f a new venture. Correctly defined, these can be used as the basis for any critical examination to probe existing or perceived Strengths, Weaknesses, Threats and Opportunities. This then leads to strategy development covering the following issues discussed in more detail below:
> Vision > Mission > Values > Objectives Strategies Goals > Programs
Key Steps towards a Strategic Plan The preparation of a strategic plan is a multi-step process covering vision, mission, objectives, values, strategies, goals and programs. These are discussed below. The Vision The first step is to develop a realistic Vision for the business. This should be presented as a pen picture of the business in three or more years time in terms of its likely physical appearance, size, activities etc. Answer the question: "if someone from Mars visited the business, what would they see (or sense)?" Consider its future products, markets, customers, processes, location, staffing etc. Here is a great example of a vision: I will come to America, which is the country for me. Once there, I will become the greatest bodybuilder in history. I will go into movies as an actor, producer and eventually director. By the time I am 30 I will have starred in first movie and I will be a millionaire. I will collect houses, art and automobiles. I will marry a glamorous and intelligent wife. By 32, I will have been invited to the White House. Attributed to Arnold Schwarzenegger; elected Governor of the State of California in 2003.
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The Mission The nature of a business is often expressed in terms of its Mission which indicates the purpose and activities of the business, for example, "to design, develop, manufacture and market specific product lines for sale on the basis of certain features to meet the identified needs of specified customer groups via certain distribution channels in particular geographic areas". A statement along these lines indicates what the business is about and is in finitely clearer than saying, for instance, "we're in electronics" or worse still, "we are in business to make money" (assuming that the business is not a mint!). Also, some people confuse mission statements with value statements (see below) - the former should be very hard-nosed while the latter can deal with 'softer' issues surrounding the business. The following table contrasts hard and soft mission statements.
Hard What business is/does Primary products/services Key processes & technologies Main customer groups Primary markets/segments Principal channels/outlets Soft Reason for existence Competitive advantages Unique/distinctive features Important philosophical/social issues Image, quality, style, standards Stakeholder concerns Soft Statement
Hard Statement
X Ltd designs, develops, assembles and markets systems for data base management. These systems integrate its proprietary operating system software with hardware supplied by major manufacturers, and are sold to small, medium and largesized companies for a range o f business applications. Its systems are distinguished by a sophisticated operating system, which permits use without trained dataprocessing personnel.
Our mission is to enhance our customers' business by providing the very by providing the very highest quality products and services possible. Our customer support strategy is based upon total, no-compromise customer satisfaction and we continually strive to offer a complete package of up-to-date value added solutions to meet our customers' needs. We value above all our long term customer relations.
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Intel's original plan, written on the back of a menu is an excellent example of a hard statement: The company will engage in research, development, and manufacture and sales of integrated electronic structures to fulfill the needs of electronic systems manufacturers. This will include thin films, thick films, semi-conductor devices, and ........ A variety of processes will be established, both at a laboratory and production level ...... as well as the development and manufacture of special processing and test equipment required to carry out these processes. Products may include diode transistors ........ Principal customers for these products are expected to be the manufacturers of advanced electronic systems .... It is anticipated that many of these customers will be located outside California. When drafting a mission statement, critically examine every noun, adjective and verb to ensure that they are focused, realistic and justified. Too much huff and puff and no one will take it seriously: too weak and it will be forgotten instantly. The Values Values are the area that is needed to address the beliefs and principles of the governance and the operation of the business and its conduct or relationships with society at large, customers, suppliers, employees, local (or wider) community and other stakeholders. The Objectives The next key element is to explicitly state the business's objectives in terms of the results it needs/wants to achieve in the medium/long term. The following terms have been used in strategic planning objectives: desired end states, plans, policies, goals, strategies, tactics and actions. Because of this confusion, definitions vary, overlap and fail to achieve clarity, thus people lose interest at this stage for fear of doing the wrong thing. The most common concept is to think of these outcomes as specific, time bounded statements of intended future results and general and continuing statements of intended future results, which most models
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refer to as either goals or objectives (often interchangeably).
Some advocates would then have you arrange your objectives in a priority order, with the Top Rank Objective (TRO), Second Rank Objective (2RO) etc. however we find that typically the objectives or goals are all interlinked either in parallel or complementary to each other, often using similar resource or effort, and there is no point in reinventing the wheel each time. The main advantage is that people typically have several goals at the same time. "Goal congruency" refers to how well the goals combine with each other. Does goal A appear compatible with goal B? Do they fit together to form a unified strategy? "Goal hierarchy" consists of the nesting of one or more goals within other goals where you could have different sub goals for different departments or business areas, which combined would provide the supporting legs of an over-arching goal or objective from a senior management perspective. Goal setting often requires having short-term, medium-term, and long-term goals. In this model, one can expect to attain short-term goals fairly easily: they stand just slightly above one's reach. At the other extreme, long-term goals appear very difficult, almost impossible to attain. In Jim Collins Book From Good To Great he mentions that within the objectives and in the strategic management jargon many of the companies that achieved great sometimes referred to "Big Hairy Audacious Goals" (BHAGs) in this context. Aside from presumably indicating a necessity to achieve profits, objectives should relate to the expectations and requirements of all the major stakeholders, including employees, and should reflect the underlying reasons for running the business. These objectives could cover growth, profitability, technology, offerings and markets and will be impacted by Porters forces and a correct analysis of those elements providing robust, feasible and attainable outcomes over time. The Strategies Strategies are the rules and guidelines by which the mission, objectives etc. and how they may be achieved. A common mistake of many companies, small and huge, is that they invent for themselves a short term strategy and a long term strategy and often never the twain shall meet. You devise a strategy, and that strategy stretches from the short term over to the long term with various activities and checkpoints in-built. The key is to be flexible. No goals or objectives are cast in stone, and they can be
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revised as external and internal forces demand change. The shorter term strategy is really the path currently undertaken whilst the overall strategy is a line on a map saying we want to go from here to here and we expect to pass through these other places along the way. Strategies can cover the business as a whole including such matters as recruitment, diversification, organic growth, or acquisition plans, or they can relate to primary matters in key functional areas, for example: The company's internal cash flow will fund all future growth. New products currently being developed and tested will progressively replace existing ones over the next 3 years. All assembly work will be contracted out to lower the company's break-even point. As Kimberly Clark said Shut the Paper Mills, we want to make consumable paper goods Use SWOTs to help identify possible strategies by building on strengths, resolving weaknesses, exploiting opportunities and avoiding threats. The Programs or Tactics The final elements are the Programs which set out the implementation plans for the key strategies. These should cover resources, objectives, time-scales, deadlines, budgets and performance targets or in other works the Tactical Plans. The tactical plan is developed by the management team (note: Not the Senior Managers per se), which consists of the very people responsible for getting the actual work done. They have to make sure that the strategy developed to achieve the mission of the organisation is successful, within the limits of available means and resources. Therefore, it is necessary to understand strategic goals and systematically decipher those goals in order to formulate an effective tactical plan that charts segregated courses of action to result in the attainment of strategic objectives. Tactical moves are specific activities that are time bound (usually stated in weeks or months) and are geared to result in a predefined outcome. Tactical plans are most often used in larger businesses not because they arent needed in small business, but because small business owners very often dont take the time to formulate them. Ironically, tactical plans are even more important to small businesses, whose survival often depends on plan execution due to a lack of deep pockets or other resources.
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If you have a small business but have not taken the time to implement your business strategy or tactical plan, use the information above to do so. It certainly wont be easy but the end result will be well worth the time and effort. Use Hindsight when Strategic Planning Statements on vision, mission, objectives, values, strategies and goals are not just elements of future planning. They also provide benchmarks for a historic review. Most managers will find it exceedingly difficult to develop a future strategy for a business without knowing its current strategies and measuring their success to date. Effect not Equal to Cause when Planning Strategy When reviewing a business it is essential to cut through the symptoms of problems and reach the underlying causes. Questions which can assist in revealing the real causes include the following: "What stopped the business from?" "What caused the cause of?" "Why didnt the business achieve a 25% return?" Do not turn it into a witch-hunt. No purpose is gained from victimising an individual, if mistakes were made, then a training need is apparent, if collective decisions proved flawed, then lessons are to be learned. Never ask who was the cause of the failing other than in a supportive context. By way of an example consider why this company may be unable to increase its market share: Because; It cannot penetrate major customers Its product range is too narrow The company doesn't have the capability to produce additional products Of shortcomings in R & D Of a lack of expertise and resource R & D is not an immediate priority Of a lack of profits Of a high interest burden Page 8
The company is over-reliant on borrowings The shareholders won't/can't raise additional permanent capital. The moral in this case is that there are no major customers due to undercapitalisation! What is apparent is that we must understand our companies position within the marketplace as a whole and locally regarding industry peers and their advantages, bargaining powers of suppliers and clients, new entrants into the distribution arena and substitute products or other means people may employ to obtain their desired outcomes, and if we can exploit any of these areas, getting the jump on our competitors. Rolling all that into the equation we can then work out where we are today and where our strengths, weaknesses, opportunities and threats may lay.
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By Lee Werrell FInstSMM Chartered MCSI CertPFS
Understanding SWOT
Strengths
During your SWOT analysis you will consider a variety of strengths from within your business. It is important to note that these strengths will all be internal to your business. Strength Defined: Strength is a core capability of your business where your business has an advantage over your competitor(s), which your customers value i.e. you passed the better than your competitors test. Some Possible Strengths When completing your analysis you will find that your strengths will generally fit into two categories 1. 2. Tangible Strengths, these tend to be strengths that can be precisely identified, measured or realized Intangible Strengths, these tend to be strengths that cannot be physically touched or physically measured
Some examples of strengths that maybe found in your business include Some possible tangible strengths that you may find in your business Consider your assets including plant and equipment Are your products unique or market leading? Is your service offering (customer experience) unique or market leading? Have you got sufficient financial resources to fund any changes you would like to make? Do you use superior technology in your business?
Some possible intangible strengths that you may find in your business Do you have or stock strong recognizable brands Your reputation - are you considered a market leader? or an expert in your filed? Do you have good relationship with your customers? (Goodwill) Do you have strong relationships with your suppliers Is your business Innovative? Strategic Planning For today Page 10
Strategic Planning For Today Weaknesses
During your SWOT analysis you will consider a variety of weaknesses from within your business. It is important to note that these weaknesses will all be internal to your business. Weakness Defined: A weakness is a core capability of your business where your competitor(s) have an advantage over your business, which your customers value i.e. you failed the better than your competitors test.
Some Possible Weaknesses

When completing your analysis you will find that your weaknesses will generally fit into two categories Tangible Weaknesses, these tend to be weaknesses that can be precisely identified, measured or realized 2. Intangible Weaknesses, these tend to be weaknesses that cannot be physically touched or physically measured Some examples of weaknesses that maybe found in your business include Some possible tangible weaknesses that you may find in your business Insufficient financial resources to fund changes High costs (Not high price, high costs specifically refers to your operating costs) Inferior technology Low volume and restricted in your ability to scale up Some possible intangible weaknesses that you may find in your business Weak or unrecognizable brand Weak or unrecognizable image Poor relationships with your customers 1.
Strategic Planning For today
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Strategic Planning For Today Opportunity

Understanding SWOT Opportunities
During your SWOT analysis you will consider a variety of opportunities to your business these Opportunities will all be external to your business. An opportunity is an environmental condition in your macro or industry environments that can improve your organizations competitive position relative to that of your competitors. You will find your opportunities when completing your industry environment analysis and your macro environment analysis.
Possible Opportunities
When completing your analysis you will find that your Opportunities will generally fit into two categories 1. Industry Opportunities Industry opportunities are opportunities in your industry environment and generally reduce the level of price competition in your industry. To discover more about your industry environment we use Porters five forces. 2. Macro Opportunities Macro opportunities are in the broader environments that generally affect all businesses in your region, click here to read more about macro environment analysis. Some possible Industry Opportunities are Expand your product range Diversify your business interests Expand into your customer's field (Forward Integration) Products or service in growth
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Some possible Macro Opportunities are Favourable changes to legislation Favourable changes to any import/export constraints Favourable economic outlook Favourable cultural shifts Technology that your business can utilise such as Ecommerce or Internet sales
Threats
During your SWOT analysis you will consider a variety of threats to your business these threats will all be external to your business. A threat is a forecast environmental condition that is out of your control and has the potential to harm your businesses profitability. A common example: If you import goods for resale, then a negative shift in exchange rates will force up your costs, if you are unable to pass these costs on to your customers, your margins will reduce. So, exchange rate volatility could be a threat.
Some Possible Threats

You will find that your threats will fit into two categories; Industry threats Industry threats are related to an increase in the competition in your industry or a reduction in market size. Generally industry threats threaten to reduce your businesses profitability. Macro Threats Macro threats are the kinds of things that affect all industries in your region. These also generally result in a risk of reduced profitability. Some possible Industry Threats include Low cost imports, the threat of low cost imports affects almost any manufacturer in the developed world, with the possible exception of food manufacturing. Consumer ability to shift to a substitute product and changing demand for substitute products, consider the manufacture of nails used in the assembly of Page 13
house frames, if housing developers shifted from timber frames to steel framed houses, demand for nails would drop significantly. Slow market growth or decline in market size, western countries the demand for alcoholic drinks remains pretty flat
Some possible Macro Threats include Demographic changes, the aging workforce making it difficult to get skilled workers in many developed countries. Industry Regulation, a good example is aged care facilities who are impacted by increasing regulation and increased costs to administer these new regulations.
Tips to Avoid the Common SWOT Analysis Mistakes

Here are three of the most common mistakes people make when completing their SWOT diagram. Do your homework Link your actions with your SWOT Stay away from solutions You will find that the content of the vast majority of completed SWOT diagrams contain unverified strengths and weaknesses that are not aligned to the organizations core capabilities. Worse still, the people completing the SWOT have not used our better than your competitor test. Most completed analysis also show that those completing the SWOT have only a limited understanding of the organisations strategic environments. Link your actions with your SWOT During the formation of strategy and development of business plan activities the majority of people do not focus on the content of their SWOT analysis. Instead they start to go off on a tangent and formulate plans and objectives and almost completely ignore their SWOT and develop a business plan that has no regard for this analysis. Strategic Planning For today Page 14

Stay Away from solutions
A SWOT Analysis is an analysis tool only that should contain independently verifiable statements of fact. You should stay away from solutions or developing solutions until you have a completed SWOT diagram. Once you have a competed SWOT Diagram you will shift to solution mode.
You will find that many people will want to list solutions in the opportunities section of their SWOT. It is therefore vitally important, though challenging, to stay away from solution mode. This is why we always recommend a facilitation exercise rather than doing it yourself. A facilitator can offer guidance and direction and stop that tangential discussion before they start. Our Consultancy, with its expert team of business management consultants will act as your outof-house in-house management team, whether on a project by project or on a long-term basis. We will help you manage your business to optimise your opportunities. Having been involved in Strategic Planning and Risk Assessment with the Boards of Directors of well-known companies, we have also been involved in developing the Operational and Tactical plans that implement the vision. We can provide on-the-spot support and guidance for the length of the project, from when it is a twinkle in the eye, through to the launch and up to its successful embedding. With our select team of experienced strategic planning consultants, our consultants will help you generate the business strategy and will guide you through putting in place the necessary effective and precise strategic process that is targeted to ensure your product or service has the right backing, the right positioning and the right promotion to provide sustainable success. Strategic Planning For today Page 15
Whatever the size of your business, from start-up to international company, specific objective strategic planning support can provide the crucial difference which will mean that resources are concentrated constructively, energies are focused creatively and the outcome is fully profitable over the long term. Companies we have been involved with in the last 10 years;
CEI Compliance can help provide a full compliance support service, reducing required management time, ensuring all areas are up to date and working for your firms long term benefit. Call 07092 289901 today or go online at www.ceicompliance.co.uk
This whitepaper was written
by Lee Werrell FInstSMM Chartered MCSI Cert PFS, founder of CEI Compliance Limited.
Lee is contactable at any time and welcomes enquiries from all businesses.
Call 0800 689 9 689
Avoid S166 Skilled Persons Reports download our free guide here
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