Have you decided that your organization needs a strategic business plan but don’t know where to start? What preparation is required to build your strategic plan?
In this third of a series of blogs about strategic plans, I attempt to answer these questions.
To access the first blog in the series “Why do you need a Strategic Plan?”, click here. To read the second blog in the series “The 7 Stages of the Strategic Planning Process”, click here.
Getting To Work – The Research Phase
As identified in the first blog of the series, after getting the basics together including the project plan, the team identified, the timeline for completion, the approval process, etc., it is time to start the work. The first major activity is the research phase which starts by analyzing the external environment (market segments, growth rates, competitors, partners and industry trends) and the internal environment (products, team, quality control, etc.).
The three important charts or diagrams that organizations use to summarize all of the information are the following:
- Market growth chart: This chart shows the market size, sometimes broken down by geography or sector, for the past few years (3 to 5 is sufficient) and projecting forward for the next three or five years. It is best if this information is based on industry analyst reports or other credible sources that can be referenced.
- Competitive analysis chart: This two-dimensional chart or four quadrant chart is used to compare the organization’s products or services to those of the top three to ten competitors. The two axes of the chart represent the relative performance of the two most important attributes of your product or service, from your customers’ perspective. These attributes might be price, quality, size, features, scale or other attributes important to your customers or clients.
- SWOT analysis: SWOT stands for strengths, weaknesses, opportunities and threats and is a way of assessing the strength of an organization, both the current situation (strengths and weaknesses) and the future prospects (opportunities and threats).
Creating a SWOT Analysis
The SWOT diagram, sample shown in the chart below, is a very important snapshot of the state of an organization. Let’s dive a bit deeper in each of the four areas:
- Strengths: List the major strengths of your organization. This should be a honest assessment and include company size, agility, market share, team, expertise, technology, products, services, customer relationships, cost structure, location, geographic reach, partners, etc. Every organization has some considerable strengths or they won’t exist very long.
- Weaknesses: Identify the key weaknesses of the organization. This could include things like company size, market share, missing expertise, required relationships, competitor strengths, etc. Every organization has some weaknesses and if you can’t list many, then maybe you haven’t looked deep enough.
- Opportunities: These are those blue-sky ideas that could be captured by the organization but not currently being delivered. This could be new geographic or vertical markets, new products or services, new business models, acquisition of competitors etc.
- Threats: These are external threats to the ongoing success and survival of the organization and may include competitive, environmental, regulatory, political etc.
The quick formula for the strategic plan is as follows:
- Play to your Strengths
- Improve your Weak areas, where possible and cost effective
- Investigate Opportunities for growth, improved margins etc.
- Understand the Threats looming on the horizon and when possible have an approach or action plan to overcome or mute the threat should it occur.
From this SWOT analysis, a detailed action plan can be initiated to help the organization be more productive in the market and more sustainable for the longer term.