What Is The New Business Strategy in 2012?

Most managers and executives are looking for ways to constantly develop a business strategy that works for their business. In 2012, a business is considered successful if it is return-driven. Return-driven businesses are those that plan and implement business activities consistently with the tenets and foundations and exhibit extraordinary financial results.

Studies have shown that these types of businesses follow the Return Driven Strategy (RDS). RDS provides an understanding of what specific types of business activities drive the highest levels of wealth-creation. With its foundations in one of the most advanced financial modeling frameworks, it provides a business strategy for forecasting the potential for a particular initiative to create wealth or destroy it.

Concepts of RDS

There are often misunderstandings about business strategy that have led many companies to destroy value, or have severely limited the wealth that could have been created. But there are specific concepts supported by the framework that have led to business success, such as:

– Businesses with great products are often not great businesses

– When to shrink and grow rich – or grow and be poor

– Why “first mover advantage” is often anything but

– The undeniable financial impact of business ethics on performance

– “Being different” is a by-product of great strategy, not a focus

– How a monopoly, generally so desired, will cause valuations to stagnate

– The difference between a great company and a great stock

– The real customer needs are seldom the obvious ones

– How treating employees as customers generates higher returns to all constituents

– Which is more important, strategy or execution? Both.

The highest benefit that RDS gives to management is better resource allocation: the prioritization of time and efforts in planning, analysis, and implementation, which are critical in adding value to a business.

Business Strategy For a New Product Launch

Business strategy can also be referred to as a suitable game-plan that is specifically designed to reach certain pre-defined goals & objectives. The two most important stages of a well-designed business strategy are planning & execution. The success of any business strategy is more or less jointly dependent upon the efficiency of both these elements. Success is never guaranteed in any enterprise but you can definitely improve your chances for the same if your product is backed by an intelligent business strategy. Let us take a look at some of the most effective marketing strategies that can potentially grant a fine start to a newly launched business/ product/ brand:

Create a Comprehensive Marketing Plan
Planning is always the first step to any business strategy. A comprehensive business plan offers better understanding of the current market and its demographics. A detailed market analysis is extremely vital as it makes you aware of the customer’s specific requirements from the product to be launched. A product that serves most demands of the consumer is bound to be successful.

Observe & Evaluate Your Competition
Before launching a new product on the market, it is vital that you study your competition thoroughly. There may be many existing products that are similar to the one you are expecting to launch on the market. You can investigate the features offered by a competitor’s product/ services and accordingly review your business merchandise to present it in a way that sets it apart from the rest.

Reach Out to Your Target Audience
It is only after undertaking an in-depth analysis of the current demographics that you can successfully locate the target audience for your products and service. The best bet would be to target those customers who are habituated to buying items that offer features that are similar to your product. If your product/ service is on the same line and offers a better quality plus some sort of an additional benefit, there are maximum chances of the target audience switching over to you. This is one of the most commonly practiced business strategy.

Select an Appropriate Channel for Product Sales & Marketing
There are many different ways to advertise, publicize or market a particular product/ business. These days one of the strongest tools for product marketing is internet. Online marketing is certainly more convenient & effective as compared to various conventional offline marketing tactics. The best business strategy in this direction would be to use multi-channel marketing approach but doing so would require a massive financial investment which may not be possible for all businesses. A much viable option would be to analyze the consumer demand of the new product to be launched and accordingly select a suitable channel for advertising the same.

Test Your Product with a Group of Users before Going Ahead with the Final Launch
High-profile launch of a new product/ service involves enormous amount of financial investment. Market success of a newly launched product cannot be guaranteed hence there is always the chance of incurring massive loss. It would be absolutely amateurish & poor business strategy to directly head towards a major launch without reviewing its initial market response. A safe business strategy would be to release a small batch of your product as a sample to be used by a limited group of people before its official launch.

Create a Methodical Advertising Campaign
Media/Public relation companies are often hired for handling the promotional work of a particular product before its launch on the market. Most businesses either use grass-root marketing tactics or hold a massive launch event. It is important to ensure that your product is absolutely ready to be launched immediately after undertaking the public relation campaign so that you can cash-in on the media coverage that you receive from the same.

Eight Key Elements of a Good Business Strategy

What is a business strategy? A business strategy is an articulation of the overall direction of an enterprise in the medium and long-term. It basically specifies the way an entity competes in an industry. In other words, strategies define the rules and guidelines by which the mission, objectives etc may be achieved. Such strategies can cover the whole business or can relate to functional areas such as operations, marketing, finance or human capital. Strategies differ from tactics which are short-term approaches. Your organization requires a unique strategy to be able to differentiate itself properly in the market. But what are the eight key elements of a good business strategy? What constitute the salient features of a good business strategy? The guidelines are contained in this article.

1. The vision, mission and values of your enterprise are vital. You need to define the purpose of your enterprise. Your vision is where you want to be in the future while your mission is the fundamental reason why you exist. Your enterprise values signify the guiding beliefs that underpin its culture.

2. A SWOT analysis is another important element of your business strategy. You need to analyze your strengths and weaknesses – which are internal, and your opportunities and threats – which are external. What industry are you operating in and how profitable is it? What is your competition? Where are you now? What constitute your core competences? Competitor evaluation for example considers aspects such as the products, operating costs and pricing.

3. Your unique value proposition is another big issue. This relates to the products and services that you offer or intend to offer. How are you different from the rest of the enterprises? What unique value do you offer – which is vital to the needs of your target customers? Your value proposition provides for you the competitive advantage.

4. What about your value chain? This denotes the succession of activities to design, produce and market, deliver and support your products or services. Your value chain constitutes the sequence of activities through which value is added. Your value chain should be consistent with your customer needs. Activities that enhance value are called value drivers. These are tools for identifying ways to create more value. The value chain comprises primary activities and support activities. Analyzing activities along your value chain also help identify competitive advantage.

5. The market or the customer is also a key element of your business strategy. Where are you going to be active? What are the demographics? Are there any expansion opportunities? What will you do – and not do? Are there segmentation issues? Do you understand the purchase criteria, for example?

6. The economic aspects are a must. You should state your desired quantified results. Consider the resources available and also effective resource allocation. Take into account your competencies and capabilities. Is there any leverage you can take advantage of? Do you have in place methods of monitoring and evaluating your financial or monetary performance?

7. Now, what about the implementation including the operational processes? How are you going to do it? How do you want to get there? You may for example opt for accelerated growth or alternatively organic growth. Issues such as the policy framework that guides how the organization will operate become important. You have to balance risk with your desired outcome. You also consider and choose among several business options. Your programs set out the implementation plans for the key strategies. These should cover budgets, performance targets, resources, objectives and other relevant issues.

8. Finally, the last vital element of your business strategy is the cornerstone of continuous improvement in implementation and execution. Business strategy is a dynamic process. It is never static. You should be able to sense change and modify your strategy accordingly over the years. You should be flexible and open to change. When you assess progress through reviews, you can implement new plans.

Plotting Out Success With a Business Strategy

A business strategy is customarily a document that specifies the direction a business is pursuing in order to achieve its goals. In standard businesses, the strategy is often manifested from goals that were initially established as support for the businesses’ stated mission. It is developed in three ways: integration, analysis, and implementation.

Integrating a business strategy is among the many crucial steps in business planning. Creating a business plan starts with an overall vision. From that vision, it will put up its mission statement which is usually short yet more precise. Having a mission leads to definite goals the business aims to achieve. In order to accomplish that mission, businesses must devise a strategic plan with clear action plans to achieve their goals.

Analysis is among the several methods used to identify the business’ obstacles, target market, and other resources that are significant in its strategies. Also referred to as “strategic inquiry,” analysis is a way to identify the various aspects that influence business direction – be it the strengths it may propel business growth or weaknesses that need to be further addressed. Analysis is where strategic assessment methods take place. These methods include identifying different competitive scenarios, rating business competitors and evaluating the entire business environment, to name a few.

The implementation of the strategy usually follows integration and assessment. Individual players in the business, for example, can implement particular tactics that are developed to support their strategy. During the implementation stage, individual business teams or units will provide a sub-section of the strategy they are focusing on.

Choosing a Business Strategy

One of the first things to do when putting up a business is to create your own strategy. Whatever strategy you have in mind will be very important for your business’ future. You strategy should drive your decisions to bring about favorable results towards your business goals. You do not simply choose a business strategy from templates. This kind of business document should be based on your business’ unique circumstances. While this is so, there is also some value to looking at the strategies of other successful businesses and picking out relevant strategies that could apply to your business as well.

As a pioneer business, it is important to think about how you can penetrate your own market with your new products or services. Putting together a strategy and an action plan is the only way through which you can improve your chances of success and avoid wasting your precious capital on inefficient processes. Pioneering is one of the strategies used by businesses in entering a market place that has not been tapped. This offers a whole lot of room for business growth. Starting out on the right foot with a carefully thought out strategic plan is imperative. If you cannot do this on your own, it would positively impact your business profitability to get expert help.

What Comes First: Business Strategy or Tax Strategy?

Any business advisor will tell you the answer, but what’s happening in the real world?

Here are a few examples:

VAT

When Jeanne started her exercise class business, she decided after taking advice that she wouldn’t register for VAT. It makes sense. If you want to compete with everyone else then you can’t charge 20% higher prices to include VAT. But now she’s stuck. She can’t grow the business beyond the VAT threshold because she would have to increase her prices or take a significant reduction in margin. Now she’s contemplating setting up separate businesses to boost her earnings. It’s quickly going to get complicated – she can do without all the distraction of doubling the admin work.

Five years in to running his hair salon, Scott takes a day off a week and shuts early some days just to limit his takings to keep them below the VAT threshold. But he’s living hand-to-mouth.

Which came first in these two cases: tax strategy or business strategy? The payoff of course is that both businesses reduce their tax bill, but at what cost?

I’m sure this isn’t what was intended when a VAT registration threshold was included in the VAT legislation created in 1973.

Income Tax

John runs a sole-tradership and draws money from the business as he needs it and, more importantly, when it’s available during the year. His accountant then finds the most tax efficient way at the year-end to distribute his drawings between salary, expenses and dividends. Cashflow is not managed proactively, so while John knows what’s in the bank he doesn’t keep track of every due payment or receipt so he sometimes draws too much and leaves the business short of cash. This regularly causes him to have sleepless nights.

Norman runs a limited company and runs it the same way. He takes no salary as such and reinvests most of the profits into the business to fund growth. He restricts his drawings to pay as little tax as possible. He’s looking to exit the business in 3-5 years. Unfortunately, because he’s not taking any kind of salary, let alone a market rate salary, he has no idea how profitable the business truly is and is complicating things for himself when he eventually come to sell.

Ken is looking to buy a new vehicle for his business, that he will use personally too, in order to reduce his tax bill. However, his tax savings are less than savings he’ll make obtaining a vehicle this way compared to some of the alternatives.

Which came first in these cases – business strategy or tax strategy? Again, the payoff is a lower tax bill, but at what cost in terms of business growth and equity?

These examples are not rare. Many micro-businesses and SMEs are operated in a way that minimises tax liabilities. Their business strategy is defined by their tax strategy. In the real world, it seems, tax strategy more often takes priority over business strategy.

And in every case described it is stunting the growth potential of the business. That may be OK in some cases, where the owner doesn’t want to grow. However, where they do it is holding them back. In any case, all businesses should be looking to grow at least a little just to overcome the effects of inflation!

So what’s the solution? Some say that the government should change the tax rules to benefit SMEs even more. Others might point out that accountants are well placed to help business owners put business strategy before tax strategy. However, both of these “solutions” abdicate responsibility. Governments will forever tinker with tax rules, shaving a bit here and adding a bit there. The overall result is added complexity, confusion and probably a ligher wallet. Tax advisers will prioritise minimising the tax bill because that’s their job and the tangible, immediate benefits show how good they are at it.

The solution then is for business owners to recognise that a successful business should pay taxes. That a successful person contributes to society by paying taxes. And to be successful means developing and implementing a business strategy that will achieve their goals not minimise tax.

With a business strategy in place, then a tax strategy can be applied to mimimise the tax liability of that strategy without strangling business growth.

So how do you create a business strategy? There are books written on the subject, but here are the essentials:

Define what you want to achieve, or start with the end in mind as they say. I don’t believe anyone really starts out wanting to build a sub-£78,000 turnover business. Many settle for that, but few start with that ambition. Starting with the end in mind allows you to pre-think what the business needs to look like in terms of turnover, profits, headcount, infrastructure, etc.

Look at what’s already available in the market and come up with something different. That might be a different target market, or a different way of delivering what you offer. But to avoid competing on price (like Jeanne) you must have something different to offer your target market, not just a little better, or smaller, or bigger, or faster, or whiter, but completely different.

Figure out which people would want to buy that difference and why they would buy it – why should they care enough to part with their hard-earned cash?

Figure out how to tell people about it and how they can get hold of it most easily.

Then create a plan to help you understand how the cashflow will be generated to achieve your goal. Too few business plans are written to aid understanding of the specific steps involved in achieving a goal and the risks associated with those steps. Write yours with those two things in mind.

Follow the plan step by step and adapt it regularly as you gather real world data to support or otherwise your business idea.

Discuss with your tax advisor/accountant how to minimise the tax liability of the plan and impress upon them that changing the plan is not an option.

Business Strategy For Challenging Times

The importance of strategy to steer organizations during uncertain times in unchartered territories could not be overemphasized and the current crisis proves it. The role of business leaders is fundamental in strategy development and execution and key contributor to a successful strategy implementation.

Whilst one of the main roles of business leaders is to set and communicate vision, mission and strategic objectives, many fail in the execution process as they get sucked into the details of day to day tactics. With the “big-picture” view, the leadership is able to view the ever changing environment and decide on how the organization needs to respond and to steer the organization towards the longer-term objectives. Whilst the strategic vision remains the same, the route to reach the destination might follow different tactics and game plans.

The word strategy is attributed to the military as its origin was originally derived from the Greek word for “army”. It describes a plan of action developed to realize a specific goal, bearing in mind the difference between strategy and tactics. Tactics is generally concerned with the manner an engagement is conducted, whilst strategy deals with how various engagements are interconnected.

Strategy is all about clarity, and if the strategy is not simple, clear and well-understood, it will not be accomplished. It represents the organization’s main direction and prime focus and defines the way to get there. It can only be executed if everyone involved knows what is expected of them and their purpose is totally aligned with its direction.

In business, the term strategy is frequently badly and inconsistently defined. Business people involved in formulating the strategy understand it well, whilst the majority others do not, particularly if they are not engaged in its development or strategy is not communicated down to them. Others mix strategy with vision and tactics.

Strategy is a real differentiator, often seen as the secret for long-term success and one of the leadership characteristics. It unites the whole workforce, nurtures and develops opportunities and ensures endurance during crises or tough times.

Although strategy represents a solid and firm direction, it should not be built into stone. Instead, it should be adaptable to reflect changes in the environment, whether it is politically, economically, socially, technologically or legally related. Business leaders must have clear business goals and be flexible and brave to continuously recalibrate their strategy. When times are tough and visibility is not so clear, leaders must have the buoyancy to be pragmatic and adaptable, as in the mist of chaos comes huge opportunities.

Unsuccessful companies are those which do not embrace new ideas, broaden their thinking or are totally unaware of changes in their environment. Changing circumstances may necessitate a change in direction and stubbornness and fixed ideas can frequently be the enemy of business leaders.

Business strategy is all about developing a viable plan for sustained business growth, possibly diversifying into new markets or cross selling to existing customers. Adequately qualified senior executives tend to have clear views of what their business strategy means. Good strategies are not glossy documents produced to be stacked on shelves to collect dust, but rather to be communicated, executed and monitored.

Leaders are expected to champion and drive the process of strategy execution by putting the strategy into action; after all the strategy does not mean anything unless it is fully communicated throughout the organization.

The strategy can be viewed as the story of how a business plans to develop in the next few years; investments to make, markets to address, products to develop, territories to compete in, partnerships and alliances, etc. A good strategy is simple, clear, credible, motivating and reflects the distinctive features of the business. Whilst strategies may end up looking the same, the brands and the culture of the organizations will be different.

What Comes First: Business Strategy or Tax Strategy?

Any business advisor will tell you the answer, but what’s happening in the real world?

Here are a few examples:

VAT

When Jeanne started her exercise class business, she decided after taking advice that she wouldn’t register for VAT. It makes sense. If you want to compete with everyone else then you can’t charge 20% higher prices to include VAT. But now she’s stuck. She can’t grow the business beyond the VAT threshold because she would have to increase her prices or take a significant reduction in margin. Now she’s contemplating setting up separate businesses to boost her earnings. It’s quickly going to get complicated – she can do without all the distraction of doubling the admin work.

Five years in to running his hair salon, Scott takes a day off a week and shuts early some days just to limit his takings to keep them below the VAT threshold. But he’s living hand-to-mouth.

Which came first in these two cases: tax strategy or business strategy? The payoff of course is that both businesses reduce their tax bill, but at what cost?

I’m sure this isn’t what was intended when a VAT registration threshold was included in the VAT legislation created in 1973.

Income Tax

John runs a sole-tradership and draws money from the business as he needs it and, more importantly, when it’s available during the year. His accountant then finds the most tax efficient way at the year-end to distribute his drawings between salary, expenses and dividends. Cashflow is not managed proactively, so while John knows what’s in the bank he doesn’t keep track of every due payment or receipt so he sometimes draws too much and leaves the business short of cash. This regularly causes him to have sleepless nights.

Norman runs a limited company and runs it the same way. He takes no salary as such and reinvests most of the profits into the business to fund growth. He restricts his drawings to pay as little tax as possible. He’s looking to exit the business in 3-5 years. Unfortunately, because he’s not taking any kind of salary, let alone a market rate salary, he has no idea how profitable the business truly is and is complicating things for himself when he eventually come to sell.

Ken is looking to buy a new vehicle for his business, that he will use personally too, in order to reduce his tax bill. However, his tax savings are less than savings he’ll make obtaining a vehicle this way compared to some of the alternatives.

Which came first in these cases – business strategy or tax strategy? Again, the payoff is a lower tax bill, but at what cost in terms of business growth and equity?

These examples are not rare. Many micro-businesses and SMEs are operated in a way that minimises tax liabilities. Their business strategy is defined by their tax strategy. In the real world, it seems, tax strategy more often takes priority over business strategy.

And in every case described it is stunting the growth potential of the business. That may be OK in some cases, where the owner doesn’t want to grow. However, where they do it is holding them back. In any case, all businesses should be looking to grow at least a little just to overcome the effects of inflation!

So what’s the solution? Some say that the government should change the tax rules to benefit SMEs even more. Others might point out that accountants are well placed to help business owners put business strategy before tax strategy. However, both of these “solutions” abdicate responsibility. Governments will forever tinker with tax rules, shaving a bit here and adding a bit there. The overall result is added complexity, confusion and probably a ligher wallet. Tax advisers will prioritise minimising the tax bill because that’s their job and the tangible, immediate benefits show how good they are at it.

Business Strategy vs Tactics

When it comes to running your own business, everyone seems to have a plan to make you successful. You can read and study and even mimic the greats but that doesn’t necessarily mean you will succeed. To really rock the business world, you need both strategy and tactics that work and you need them to work effectively together. This is where many people in business fail because they miss one or both parts of this equation. A better understanding of strategy and tactics as well as how they work together will help you prepare properly for your business.

Your strategy is the plan of action you want to take to achieve success in your business. Your business tactics are the specific steps you take to achieve those goals. It is important that you know and understand the difference between the two and how they are applied to business. When it comes to your business, before you start any marketing or advertising campaign, you need to have a strategy and you need to implement that strategy into your techniques.

What is Strategy?

Your strategy is the act of creating decisions that will benefit the future outcome of your business. Strategy is the set of directions you make or your situation and position within the business community. Strategy often also refers to your timing in the marketplace and strategically choosing the most beneficial time to launch your business or your campaign.

1. Strategy is your overall goal in your business.

2. Strategy is your standing within the marketplace.

3. Strategy is your position in your niche.

What are Tactics?

Tactics should work with your strategy and they are the set of requirements need for your plan to take place. Your tactic is your device used for meeting your goals set by your strategy. Strategy and tactics should always be relative to one another because the tactics are the set of actions needed to fulfill your strategy.

1. Tactics are the tools you use to achieve your goals.

2. Tactics include things like advertising and marketing.

3. Tactics are the steps taken to achieve your goals.

Strategy vs. Tactics

To be successful in your business, you need to have a plan and a strategy. This strategy will include your goals and objectives for your business. They may be short term and long term. You will need to have a goal for where you want to be with your business in the future. Your tactics are what you will use to ensure that plan happens as it should.

How to Audit Your Business Strategy

Why conduct a business strategy audit?

Nearly all the major initiatives undertaken by corporate executives today are called “strategic”. With everything having high strategic importance, it is becoming increasingly difficult to distinguish between the many priorities and imperatives that are initiated in organisations. When everything is clearly strategic, often nothing strategic is clear. When everything is designated as a high priority, there are, in reality, no priorities at all.

However, when the overall strategic direction is clearly understood by everyone in your organisation, the following benefits occur:

organisational capabilities will be aligned to support the achievement of your strategy
resources will be allocated to different business processes in priority order – according to the importance of that process and its contribution to competitive advantage
your company or organisation can excel in the market place or in its business/commercial sector.

The purpose of a strategy audit is to arm managers with the tools, information, and commitment to evaluate the degree of advantage and focus provided by their current strategies. An audit produces the data needed to determine whether a change in strategy is necessary and exactly what changes should be made.

Defining a Strategy Audit

A strategy audit involves assessing the actual direction of a business and comparing that course to the direction required to succeed in a changing environment. A company’s actual direction is the sum of what it does and does not do, how well the organisation is internally aligned to support the strategy, and how viable the strategy is when compared to external market, competitor and financial realities. These two categories, the internal assessment and the external or environmental assessment, make up the major elements of a strategy audit.

The outline that follows is derived from The Business Strategy Audit (see References). It’s intended to give you a clear idea of how to set about conducting a self-assessment audit in your own organisation, without the need for any additional training or external consultancy support. But note that this outline does not include the range of Questionnaires and Checklists and the detailed guidance to be found in the full, 124-page Audit.

Part 1 ~ The External Environmental Assessment

A conventional corporate mission is to provide distinct products and services to customers at a value superior to that offered by competitors. Without a strategy, valuable resources will be diluted, the work of employees will be unfocused, and distinctiveness will not be achieved. The external environment assessment provides any business with a critical external link between its competitors, customers, and the products/services it offers.

The fundamental reason for examining an organisation’s environment in the process of clarifying strategy can be summarised thus:

Ensure that the company is meeting the needs evident in the environment
Prevent others from meeting those needs in a better way
Create or identify ways to meet future or emerging needs.

The success or failure of a company often depends on its ability to monitor changes in the environment and meet the needs of its customers and prospective customers.

An organisation’s business environment is never static. What is viewed as uniqueness or distinctiveness today will be viewed as commonplace tomorrow as new competitors enter the industry or change the environment by modifying the rules by which companies compete. Consequently, an effective strategy will do more than help a company to stay in the game. It will help it to establish new rules for the game that favour that company. Successful companies do more than simply understand their environments. They also influence and shape the circumstances around them. Companies that fail to influence their environments automatically concede the opportunity to do so to their competitors.

Steps in conducting an environmental assessment:

Step 1: Understand the external environment at a macro level

The first step in the environmental assessment is to develop a basic understanding of the trends and issues that will significantly change, influence, and affect the industry. The overall industry understanding comes from looking at the elements that influence the environment.
These elements include:

Capital markets
Industry capacity
Technological factors
Pressure from substitutes
Threat of new entrants
Economic factors
Political factors
Regulatory factors
Geographic factors
Social factors

A useful framework to understand these issues comes from answering the following questions. They should be posed directly when used in an interview, and indirectly when analysing data:

What is the long-term viability of the industry as a whole, and how do capital markets react to new developments?
What trends could change the rules of the game?
Who are the industry leaders? What are they doing? Why?
What are the key success factors in the industry?
What developments could allow a company to change the rules of the game?
Five years from now, how will winners in the industry look and act?
What is the reward (and/or cost) of being a winner/loser within the industry?
Where has the industry come from?

Step 2: Understand the industry/sector components in detail

Industry/sector components are normally broken down as follows: competitors, customers and stakeholders. Questions that should normally be asked of each key competitor include:

BUSINESS REVIEW

Strategy Issues:

What is the strategy of each competitor? Where do they appear to be heading?
What is their business emphasis?
Do they compete on quality, cost, speed or service?
Are they niche or global players?

Capabilities:

What do they do better than anyone else?
Where are they weaker than others?
Where are they the same as others?

Business Objectives:

Who are their primary customers?
What types of business do they not do or say no to?
Who are their major partners? Why are they partnering? What do they gain from it?
What are they doing that is new or interesting?

FINANCIAL REVIEW

Financial Strength – Internal:

How much cash does each competitor generate annually?
What are the drivers behind their financial success (from a cash perspective)?
How do they allocate resources (funds)?
How fast are they growing and in what areas?

Strength as Perceived by Capital Markets:

Are competitors resource constrained or do they have strong financial backing?
Is this perception consistent with the internal analysis? Why or why not?
How has the company performed in the financial markets? Why?
What constraints/opportunities do they have with respect to financial markets? Why?

ORGANISATION REVIEW

Top Management:

Has management kept the company at the forefront of the industry? Why or why not?
Are the key players seen to be moving the company forward?

Organisation:

Is the company centralised or decentralised?
Does the corporate parent act as a holding company or as an active manager?
Is the organisation perceived as being lean and able to get things done?

People:

How many people are employed? Is the company over-or under-staffed?
Are people managed to achieve mainly business objectives, human objectives or some of both? How does this affect the company?
What skills are emphasised during recruitment?

Culture:

Is the culture results-oriented?
Bureaucratic?
Flexible?

Similar lists of questions should be developed for customers and stakeholders (or see the full Audit for ready-made questionnaires).

Step 3: Integrate the components into an environmental picture

Once the findings of the stakeholder analysis, customer analysis and competitor analysis (above) have been collected, audit team members should step back and integrate the data. Integrating the different components will help the team to understand the overall environment in which the business operates.

This integration should take place at two levels: assessing where the industry is heading and the likely impact of that direction on the company, and combining the organisational assessment with the environmental assessment.

The Business Strategy Audit offers a detailed framework for analysing this data. In brief, it should highlight significant changes in the environment, and the impact of those changes on the company’s competitive position within the industry. It should address the fundamental question of how the company can influence its environment in the future, and what the business will need to look like if it is to thrive in the future.

In addition, the analysis should highlight the requirements and capabilities that are needed within the company to meet external demands. These requirements and needs should then be matched up with the current capabilities outlined in the organisation assessment. This will enable the team to determine the overall alignment of the company’s strategy to its environment.

Part 2 ~ The Organisational Assessment

Once the company’s environment has been examined and analyzed, managers should consider the qualities and characteristics of the organisation itself that influence what can be accomplished in terms of strategy. This section is about organisational assessment. The steps shown here will provide insights into the effectiveness of the company’s current strategy, and provide guidelines for increasing strategic effectiveness.