For most institutions, the core objective of the business strategy development process is to develop a viable growth strategy. Companies achieving greater than 20% sales growth almost always dwindle down to 5% within 10 years. Furthermore, real revenue growth is much less stable than ROIC ranging from 1% to 11%. Only about a third of the Fortune 500 companies are able to sustain revenue growth above the national GDP and generate returns above the S&P500. Between the 1960s and 2010, Fortune 500 companies experience an average growth rate of in less than 8% in real terms and under 10% in nominal terms. In particular, large companies struggle to grow. The fact is that most companies experience difficulty achieving significant growth, YoY. For those companies that do achieve significant growth rates, these growth rates also decay rapidly. Also, 90% of them are focused across the 4 sectors of Financial Services, Healthcare, Technology, and Retail & Distribution.
Business strategy includes the topics of growth strategy, marketing strategy, sales strategy, as well other areas of strategic thinking. Within growth strategy, we include both natural growth and inorganic growth, namely M&A. Sales strategy includes channel strategy, indirect sales strategy, and business development. Business strategy is often done within a yearly strategic planning workshop, typically held in a 2-3 day off site conference space with management and key stakeholders, both within and outside the business. Marketing strategy includes advertising strategy, product launch strategy, in addition to digital strategy. Marketing strategy and sales strategy are often discussed in unity, but are distinct in nature.
Any great firm has a suite of classic and modern business strategies. Many such frameworks and concepts rest on the seminal teachings of Porter, the founder of contemporary business strategy. Consulting firms and consultants practice these strategies to address, evaluate, and think about a number of different types of business problems, which occur in different business scenarios. Through the years, top consultancies, such as McKinsey and Bain, have come up with strategies that are widely used in the corporate world today.
Developing a familiar with how to develop a business case requires a number of critical activities. A bottoms-up financial benefit case must be created and analyzed and a business case should be developed for benefits tracking. The financial analysis involved includes financial reporting, ratio analysis, breakdown ROCE, key stakeholder value analysis, and rudimentary driver sensitivity analysis. Usually, creating a business case includes conducting targeted interviews , analyzing company financial reports, building the business case financial model, and building a top-down business case template.
There are a number of paths to growth, which fall under the two areas of expanding business scope and increasing value from current business. To build the value from current business, a company can better its value proposition, strengthen customer relationships, optimize pricing, go into new markets with their existing services, and optimize its mix of offerings. To expand the business scope, a company can branch off into new segments, expand into new categories, create new services, create new brands, launch new formats and distribution channels, and expand geographically.
Business Strategy Development
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