In two days time, a new year will be ushered in. What do you desire for 2014? What resolutions will you make? How will you ensure those resolutions will be fulfilled? I personally do not make resolutions. I instead reflect on the past year and look at what I want to achieve for the year, based on the list I drew up on my birthday in the preceding September. My birthday is when I mark my first new year.
A new year is not only a time for reflection and redirection personally; it is also time for organisations to comprehensively examine their direction. This is particularly so for companies whose financial year commences on January 1.
So where does a company begin the review? One of the first places is its strategy. Strategy is the art of marshaling resources and capabilities to achieve objectives. It is about choices and creating value for customers (Cameron, 2004). This is ultimately why businesses exist. In the review, we need to examine how and what value is created? Is value created through low cost, product differentiation, product selection, exclusivity or service? The answer to this question will determine among other areas, the product offering, the pricing, the level of service, the location and the staffing.
Value is created through unique activities. One of the tools in determining one’s strategy Michael Porte’s ‘Five Competitive Forces Analysis:”
1. Industry Rivals – One needs to determine the company’s position in its industry. Is it a market leader or follower? Is it a niche or mass provider? What are its financial and other strengths? How does or can the company leverage its strengths to its advantage?
2. Threats of New Entrants – How easy is it for new companies to enter the industry? The easier it is, the more difficult it is to maintain one’s position.
3. Threats of Substitutes – Is there a readily available replacement or other provider of the product or service offered by your company? If the answer is yes, then the company has to work even harder to create value through unique activities.
4. Power of Sellers – Is the company a price taker or price setter? Is the company largely dependent on the seller of its products or are their multiple suppliers? If there were multiple suppliers, the company has relatively greater power than if it was largely dependent on one supplier.
5. Power of Buyers – The power of the buyers is largely dependent on the options and choices they possess either through substitutes or other providers. The greater the options available to buyers, the greater their power and the greater the need to provide value to customers and to differentiate one’s service.
It is clear that a company can strengthen its position by providing unique activities. Once the choice or choices have been made, execution is the next step, and Michael Porter argues that while strategy is about choices, companies have no choice but to execute efficiently. He contends that operational effectiveness is a requirement. Companies are required to be good at what they do. Companies need to ask, ”Is our strategy effective? Is it working? “ This underscores the importance of monitoring and evaluation. Companies need to also ask, “How do you sustain and improve our position?” This speaks to the need for creativity, innovation and proactive mindset: one that is always looking for new ways to create value for customers.
This fits it well with Mintzberg’s Strategy as the “5 Ps”. Mintzberg argues that strategy is a:
1. Plan – a consciously intended course of action
2. Ploy – a manoeuver in a competitive game
3. Pattern – a course of actions which emerges spontaneously from operational decisions
4. Position – a place in the market
5. Perspective – a unique way of looking at the world
As we usher in 2014, May the Lord Bless and Keep Us, Let His Face Shine Upon Us, Lift His Face to us and Grant us His Peace, while enlarging our territory and Blessing us with Good Health, Wisdom and Discernment.
Until we meet again, May the Lord Keep Us in the Palm of His Hands.
Blessings Aplenty.
Dr Henry how do I get in touch with you?
Dr Henry I would like to contact you how do I do so?
We must campaign for abuse against women for gender equality in 2014.
You continue to inspire and educate me and your former student. Thanks. Happy new year.