Business Strategic Planning

Goals should be crafted based on the strategy of the company. There should be a cascading linkage of aligned goals throughout the company as shown on the picture below. Each department in company has goals that support the strategic objective. In term of an ideal condition, every employee has to understand his/her own goal, how to deliver the goal of their department and how the department goal can give impact to the company strategic objective.

What is strategy?

Manager has a responsibility to direct the employee to do the right things and to do things right. Doing the right things require the manager have a strategy. Doing things right is about effectiveness. These two are require to be a success company. Doing the right things is possible with the strategic planning which is a set of actions that develop a business competitive advantage to increase the performance of the company.

Competitive advantage is to be found in differences. The differences between the company and the competitor. The differentiation arise because the performance of each company. See picture below to understand how competitive advantage creates value for company.

Strategic leadership, strategy planning and strategy implementation.

Strategic leadership is how to most effectively manage a company's strategy-making process in order to create a competitive advantage. The strategy formulation is the task of selecting strategies. Strategy implementation is the task of putting the strategies into action, which is include designing, delivering, supporting, improving the efficiency and effectiveness of operations, organization structure, control system and culture.

A company is said have a competitive advantage over competitors when its profitability is greater than the average profitability and profit growth of the competitors. The managers must have the strategies that increase and grow the profitability of the company, known as ROIC - return on invested capital. To do this the company has to outperform its competitor then the company will have the competitive advantage.

A company must have a sustained competitive advantage to outperform the competitors. A company has a sustained competitive advantage when its strategies enable it to maintain above average profitability for a number of years. If a company has a sustained competitive advantage, it is likely to gain market share and achieve a higher profit growth compared to its competitors.

Business model

Basically a mental model and concept of the set of strategies and investments a company should pursue is called a business model. A business model draw a totality of how company will :

1. Select its customer.
2. Define and differentiate its product and service.
3. Create value for its customers.
4. Acquire and keep customers.
5. Provide value-added product and services.
6. Deliver the products and services to the market.
7. Configure its resources.
8. Achieve and sustain a high level of profitability.
9. Grow the business over time.

See below picture to understand defining a business. A fine tuning of a business model can make a huge impact and expected result.

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