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6 Steps To Laying Out Your Competitive Strategy

6 Steps To Laying Out Your Competitive Strategy

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6 Steps To Laying Out Your Competitive Strategy

Why do so many companies languish and watch as their business turns into a zero profit zone, while others seem to thrive?

When you look at your business, whether it’s a new venture or a company with a long history, can you answer the following questions?

  • What does my company do better than anyone else?
  • What unique value do I provide to my customers?
  • How will I increase that value next year?

Companies that fail to answer these questions, and don’t believe they are of paramount importance, relegate themselves to marginal profitability at best and failure at worst. But companies that can answer these questions are able to raise the value bar for their customers and reap the benefits of success.

Of course, being able to answer 3 simple questions does not ensure success, but it is an important step in creating a strategic and focused operation which leads to a successful business. With today’s business environment being so competitive, businesses need to re-invent the rules on which they compete in order to be successful. Companies like Wal-Mart have figured this out and have redefined competition in their market by delivering a unique value to a selected customer group. By maintaining a focus and discipline, they make it difficult for other companies to compete under old competitive terms.

Simply, competitive strategy has never been more important to success in today’s business environment. It does not matter what type of business you are in or whether you are small, big or just starting out, a company can not survive without an adequate and focused strategic plan to best the competition. Yet many companies fail to execute a successful strategy; it is these companies that languish in the zero profit zone.

In simple terms, for a company to achieve success and enter the profit zone it must first decide where it will stake its claim in the marketplace and what kind of value it will offer its customers. A company needs a clear marketing thrust, a precise knowledge of its customer base, and a product or service with a niche or some competitive advantage to be successful. Unfortunately, many entrepreneurs and business owners get stuck in the process of defining their competitive strategy. They often have the idea and the product, but being the technician they are not sure how to define its market. Even worse, many entrepreneurs assume or guess their target market and often glaze over a competitive strategy, usually to the detriment of the business.

So what are the steps to laying out a competitive business strategy? While there are different methods you can follow, I have laid a series of 6 basic steps to help you.

1. Financial perspective

This step may not seem to have much to do with strategy, but it is important to determine the value of success quickly. Why? Because, in simple terms if the venture can’t deliver significant returns, it may not be worth the risk, and you have to ask yourself if it is worth continuing with your business. In this scenario you complete a reverse income statement. You start by defining how much profit you want to see at the end of a certain time period, and then determine the amount of revenues needed to generate that profit and the costs to deliver that profit. Do the numbers add up and make sense? The goal here is to be objective, if the expected revenue is not sufficient to generate your required profit at the end based on an estimate of costs, don’t simply fudge the numbers and assume you can reduce costs or increase revenue. Be diligent in your assessment.

2. Understand the industry and competition

In step 2 you are going to assess your industry and the competition. This basically comes down to assessing 5 factors:

  1. Understanding who your competition is including factors such as competitor strengths and weaknesses, market position, pricing, new product development, advertising, marketing and branding. You should determine how you compare to your competitors.
  2. Assessing the threat of new entrants into the industry (which may include you) and any potential reactions from existing companies. There are basically 6 barriers to entry you can evaluate: economies of scale, product differentiation, capital requirements, cost disadvantages, access to distribution channels, government policy.
  3. Assessing the threat of substitute products (existing or future) that can place a ceiling on pricing.
  4. Assessing the bargaining power of suppliers who can increase prices, lower the quality of products or limit the quantity of supplies one can purchase. This all has an impact on profitability.
  5. Assessing the bargaining power of customers who can force down prices or demand better quality, more services and play you off versus a competitor.

3. Understand the Customer Perspective

In step 3 you assess your customer. This is a key step, get it wrong and you may not be able to recover. In fact, the customer value proposition and how it translates into growth and profitability for the company is the foundation of strategy.

Start by asking your self a couple basic questions: To achieve my vision, how must my customers look? Who are the target customers that will generate growth and a profitable mix of products/services?

Next, ask yourself what is the value proposition which defines how the company differentiates itself to attract, retain and deepen relationships with the targeted customers? There are basically 3 value propositions or disciplines that you can choose from:

  1. Cost leadership In this discipline you choose to provide the best price with the least inconvenience to your customers.
  2. Product leadership In this discipline you offer products that push the performance boundary (i.e. newer and better than competitors).
  3. Best total solution In this discipline you deliver what the customer wants, cultivate relationships and satisfy unique needs. In this case, you may not be the cheapest or the newest, but the total package you deliver to the customer cannot be matched.

In order to help you determine which of these value propositions you decide on, you may want to work through a value chain: 1. Determine your customer priorities 2. Determine the channels needed to satisfy those priorities 3. Determine the offering (products) that are best suited to flow through those channels 4. Determine the inputs (materials/knowledge etc) required to create the product 5. Determine the assets/core competencies essential to the inputs (ask yourself, in order to satisfy my customer at which processes must I excel? For example, product design, brand and market development, sales, service and operations and/or logistics).

4. Finish the business model

The business model shows how all the elements and activities of a business work together as a whole by outlining how the business generates revenue, how cash flows through the business and how the product flows through the business. By this time, you should understand the revenue capability of the business, how the industry works and your competition, who you customer is, what you are going to offer them and how you are going to offer it. By drawing a flow chart that shows how these activities are linked together you will understand how the business activities flow to generate projected profit, which you determined in step 1. This is also a good step to see if something is missing in your analysis.

5. Construct the business plan

By the time you get to this step most of your work is done. If you are looking for financing, a formalized plan will have to be completed. If you do not need financing, simply make sure the preceding tasks are documented so that they can be reviewed and changed as time progresses (strategy is an ongoing process, not a one time task).

6. Learning and growth perspective

In this last step, you ask yourself how/where the organization must learn and improve in order to become and remain successful. For example, determine the skills, capabilities and knowledge of employees needed, the technology needed and the climate and culture in which they work.

About The Author

You have permission to publish this article electronically or in print, free of charge, as long as the bylines are included. A courtesy copy of your publication would be appreciated. Send to:jeff@companyworkshop.com

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6 Sigma and Ethics

Ethical Aspects of 6 Sigma Methodology

Ethical Aspects of 6 Sigma Methodology

The entire concept of 6-σ (Six Sigma) is based on satisfying customers. Although the methodology is said to have been first proposed by Bill Smith of Motorola company (Wiki, 2006), statisticians have been aware of this concept long ago. Smith only was the first to apply it in production processes in 80’s. Since then, the methodology has been used in many organizations and had saved millions (Wiki, 2006).

The principle revolves around putting the stress on measuring and harnessing dispersion in the production process (opposed to stressing the importance of mean average) since dispersion is the determinant of the number of defective outcomes. (I would not delve into statistical aspect since it is irrelevant to the scope of this paper, but I will have to mention some though.) Thus, the methodology is aimed at increasing the number of standard deviations (generally marked σ) so that 6 these standard deviations fall within the acceptable limits from each side of target mean. In other words, supporters of the methodology strive to mold the production process in such a way that over 99.99% of the outcomes are within the acceptable limits, or to be more precise, 3.4 defects per million opportunities (Saxena, 2006). This, in turn can be achieved by either of the two options. First, which is very costly but beneficial in long term, is to control the production process so that the sample of many output units (products or services) forms a much higher and thinner bell-shaped curve, this way naturally decreasing dispersion and concentrating most outcomes near the mean. The other option, which is the target of this paper, is to shift the planned specifications or acceptable limits as well as the target mean so that more outcomes are within the limits. (This technique is surely much more complex than what is covered in this paper.)

From the point of view of the producer – the one who applies 6-σ – the methodology is rather beneficial, because it reduces the number of defects and makes the operations more stable. However, from the point of view of the consumer, this might not be as good as it seems, although 6-σ is aimed at customer satisfaction. The problem, however, is that for customers the target expected outcome is satisfied in fewer number of times because the producer is oriented at reducing variance by shifting the entire production. So, even though vast majority of outcomes are within the specified customer requirements, the best desired outcome occurs significantly fewer times.

The ethical problem is that customers still want the best desired product/service more than simply satisfactory. And so, instead of simply maintaining the production at a certain level and focusing on quality and the target mean, the producers shift the target mean but put more stress on keeping production within acceptable consumer specifications. Therefore, the price the producer pays for reducing defects (barring the financial expenses) is that consumers receive less products of their target expected quality. Now, why can’t the producers simply make the product as they did before, focus on the target expected outcome, and reduce unacceptable variations using some other techniques? Instead, producers save millions while consumers less frequently receive the best product/service though with only 3.4 defects per million outcomes. Thus, it is an ethical issue whether producers have a moral right to turn to such saving techniques, taking into account that clients benefit quantitatively, but not qualitatively.
Bibliography

1. Six Sigma. (2006). Wikipedia – the free encyclopedia. Retrieved June 19th 2006 from http://en.wikipedia.org/wiki/Six_Sigma
2. Statistical Six Sigma Definition. (2006). iSixSigma LLC. Retrieved June 19th 2006 from http://www.isixsigma.com/library/content/c010101a.asp
3. Saxena, S.K. (2006). Introduction to Six Sigma. Discover 6 Sigma. Retrieved June 19th 2006 from http://www.discover6sigma.org/post/2005/10/introduction-to-six-sigma/

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Author Bio
Sean Priestley is master administrator and manager of NeWavEssays custom essay writing service.

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Business Intelligence

Business Intelligence – Accelerate Your Business Performance

Business Intelligence – Accelerate Your Business Performance

By: Ramakrishnan

Business Intelligence (BI) is the process of gathering information from the business. The gathered business information is transformed into knowledge using business intelligence. To run the business successfully one should have the comprehensive business knowledge and understanding of your business strengths and its weakness. In business intelligence will take into account the internal and external factors of a business. Business intelligence will ease the decision making process, helps in understanding the customer taste, market trends.

Business Intelligence Definition
The basic definition of Business intelligence is defined as “the process of gathering information about a business or industry matter; BI is a broad range of applications and technologies for gathering, storing, analyzing, and providing access to data thereby that help to managers make business decisions.”

Business Intelligence Includes What
Business intelligence (BI) includes software applications, technologies and analytical methodologies that perform data analysis. Business intelligence covers data mining, Web mining, text mining, reporting and querying, OLAP, and data visualization.

Knowledge Management Is Part of Business Intelligence
Knowledge management is one of the methods in Business intelligence. Knowledge management has been defined as “the technique and tools for capturing, storing, organizing, and making knowledge” Business intelligence is driven by an objective laid by the company. The duration of the objective may be short period or long period.

Business Intelligence Software
Identifying and understanding business opportunities in today’s vast business environment requires far more than an understanding of technology trends. Business software helps the business management to access up-to-date and accurate information about the business performance. Identifying and understanding business opportunities in this vast business environment requires far more than an understanding of technology trends.

OLAP powerful BI Software
The most popular business intelligence tool is OLAP (Online Analytical Processing). OLAP (Online Analytical Processing) is a powerful, Business Intelligence & enterprise reporting application for small and medium organizations with the capacity to fully Integrate Enterprise Information.

OLAPBrowser delivers incredible reporting power. Create global and enterprise information delivery systems, executive information Systems and personal analytical application.

Author Bio
Ramki is with Axsellit Technologies (www.axsellit.com/business-intelligence.html) Business Software. Axsellit Software delivers professional, benefit-enriched business solutions with an unbeatable performance-to-price ratio. Axsellit Technologies provides Business Intelligence Software

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Getting the Fundamentals Correct

Get The Fundamentals Right

Get The Fundamentals Right

By: Kevin Sinclair

To succeed in business on the Internet, or in the off-line world, requires an understanding of the fundamentals of business and using them to your advantage. In this article, I will outline what I consider the fundamentals of business success are.

Believe in Your Product or Service
First, you need to believe in your product or service. If you don’t believe in it, you will have a great deal of difficulty selling your product or service to other people. You also need to have confidence in your ability to provide and promote your product or service. An old saying sums this up best by stating: “All things are possible to he who believes”.

Aptitude for the Business
Secondly, you need to have an aptitude for the business. You will also need the motivation to acquire at the very least basic skills and experience before you start your business. If you were to set yourself up as a web designer but did not have any skills or training in this area, then you will almost certainly fail. However, if you are employed as a bookkeeper and you enjoy the job, then setting up your own bookkeeping service would be a sensible choice with a greater chance of success.

Be Responsible
Thirdly, you need to be responsible to your customers. This is achieved by only making commitments you can keep and by not engaging in misleading or dishonest advertising. If you want to build long-term success in your business, then you need to develop long-term satisfied customers. When their needs are being satisfied, customers are at their happiest.

Aim for High Quality
The next principle is that you need to have a high quality product or service. This will be your best advertisement. Inferior quality products usually generate poor customer satisfaction. A dissatisfied customer can be very dangerous for your business. Usually they tell on average about fourteen other people who will then be disinclined to buy your product or service based on the experience of that one dissatisfied person. Therefore, always aim for a top quality product or service.

Make a Profit
However, it is not enough to have a top quality product or service. You also need to have a product or service that will generate enough income to cover all your business expenses and give you a satisfactory wage. A friend of mine once said that business is only about two things: satisfying customers and making a profit. A simple statement but very true.

Sufficient Start-up Capital
You also need to have access to enough cash to set up and run your business, and enough income to meet your private expenses during the start-up phase. A major problem with many home and small businesses is that they fail to have enough money available to ensure their success. There is nothing more discouraging than having a great idea, getting it started on a shoestring, not being able to expand due to cash shortages and seeing a competitor come along and steal your market.

Start Small
Another fundamental principle of home business success is that you start small. This will enable you to minimize your overheads until you are confident of your success in the marketplace. For many of you, this would mean starting part-time while retaining your full-time income source. When you can, expand your business into a full-time venture. This is a great way of minimizing the risk of failure.

Be Well Organized
Successful businesses are well organized. They have a system for keeping track of expenditure and earnings. This level of organization in your business will help to ensure that you are providing your customers or clients with a top quality product or service. It will also ensure that you have enough information available to maximize your profitability and to satisfy your legal requirements for record keeping.

Be Prepared
Preparation is another key ingredient in your business success. This preparation will include being aware of the regulations and laws affecting small and home business. Armed with this knowledge, you should not have any nasty surprises from unintentional violations of the law.

Have a Business Plan
Finally, successful businesses have developed a comprehensive business plan. This is their road map to success. It tells them where they are going and how they are going to get there. There are a number of good resources about business planning on the Internet. Here are some:
http://www.bplans.com
http://www.businesstown.com/planning/creating.asp
http://www.bizplanit.com/vplan.htm

Conclusion
It has been said that genius is one percent inspiration and ninety-nine percent perspiration. The same can be said about business success. Without having the fundamentals in place, a great business idea will usually fail. Set yourself up for success by considering each of the points raised in this article.

Author Bio
Article by Kevin Sinclair, CPA, of Personal & Business Success Resources. Visit his website at www.business.ksinclair.com.

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Identity Theft and New Ventures

Identity Theft of your Limited Company

Identity Theft of your Limited Company

The UK registry at Companies House provides a useful service for limited companies. In addition to incorporating and dissolving companies they also maintain the national register. This involves the recording and storing of data relating to all UK incorporated companies and LLP’s. Historically most records were updated by the submission of manual forms. This would include the submission of company accounts, change of address forms and forms appointing new company officers as well as many other documents. Whilst this system has served a purpose for many years it is far from secure as signatures are not checked and changes are implemented without further checks.

Identity fraud has increased over recent years, which meant that the previous system at Companies House was open to serious abuse. Companies have found their records have been updated without their knowledge. Individuals can masquerade as company officers, open bank accounts and enter into fraudulent contacts. It has been too easy for too long for businesses to be deceived and for companies to be hijacked

However, Companies House has now introduced some basic protective measures that limited companies in the UK can adopt. Firstly they have introduced ‘WebFiling’. This is an electronic online filing system. It allows companies to make changes to their company details online. Instead of posting forms to Companies House changes can now be made in minutes online. To increase security there are two simple security procedures used. A security ‘authentication code’ is issued for each company and users require a security code to access the software.

The second security improvement is that users can sign up for Companies House ‘PROOF’ service. This means that they will no longer accept manual paper forms to make changes to your company records. This stops the opportunist from simply completing forms and posting them to Companies House. Any paper forms will require further authorisation from existing officers.

Whilst these two points should reduce identity theft companies can also ‘monitor’ their companies filing. This does not literally require daily monitoring of Companies House. For a small fee of £0.50 per annum Companies House will inform you by email every time a document if filed at Companies House for your company. This includes manual and electronic filing. This means that you can double check all changes made to your company without leaving your desk.

These three simple to implement measures should help protect the future identity of your limited company. Not only will you have piece of mind but you will save your company time and money by filing online.

Author Bio
Michael Harris is a university graduate who has worked within the company formation and business advice industry for many years. The SFS Group of Companies provide same day company formation

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Corporate Seals

Company Seal that Deal – Literally!

Company Seal that Deal – Literally!

A company seal is a device commonly supplied by Company Formation Agents when registering new companies for clients. The company seal offers a way of embossing documents with the company name and number as a way of sealing the document. This seal is often used in place of signatures of the authorised representatives of the company.

In the UK, Prior to the Companies Act 1985, a company seal was legally binding on a company when a document such as a contract or share certificate was embossed by the seal. Since the Companies Act 1985 (and subsequent amendments) were introduced the company seal was no longer a legal requirement of a limited company. Instead a company can effectively seal a document with the signature of two company officers, typically a director and secretary of the company.

Although this change in law in the UK would appear to make the company seal a redundant item they are still widely used today. The company seal still has great importance in other countries and many UK companies doing business overseas will often need to seal a document to complete a contract or agreement.

How does it work
The company seal is actually an embosser as opposed to a stamp that would contain ink of some form. When the seal is pressed onto paper it creates a raised impression of the information contained within the two dies.

The company seal has two dies containing the information to be embossed on to paperwork. One die will have a raised impression and the other die will have the inverted image of this information. You simply insert a piece of paper between the two dies and press the lever, or squeeze the plier, and the two dies come together creating a raised impression on the paper of the information contained on the dies.

This embossing process is a simpler alternative to more traditional seals which involve using wax and a stamp. Wax would be heated and melted onto a document which is then impressed with the stamp containing engraved information. The engraved information would create an impression in the wax and therefore seal the document. As it is not practical to heat wax in many situations the company seal offers a simple alternative by impressing directly into paper.

If you wish to obtain a wax effect from a company seal you can use self adhesive wafers which are designed to look like wax. The wafer is simply placed on the paper before embossing, then emboss in the centre of the wafer and the raised image is more defined as would occur with a wax seal. Company seal wafers are typically supplied in red (to look like wax) or gold.

Various types of company seal
Company seals are available in two formats.

The cheapest seal is a plier type seal which has two dies, one on each side of the plier. As the plier is squeezed, with paper between the pincers, the two dies come together and emboss the paper. This plier type company seal offers an economical and portable way of sealing documents but is limited in its reach from the edge of paperwork and is unable to emboss a satisfactory image into thicker paper.

The more robust option is the lever type company seal. This seal has one die on its base and a second attached to lever above the base. Paper is inserted over the base and the lever is compressed thus embossing the paper. As the force created by the lever is much greater than the plier type seal the lever company seal can emboss thick paper and card. Lever company seals are available in various finishes so can be kept on a desk adding a professional look to your work environment.

Who uses company seals
Company seals are still widely used by limited companies in the UK to emboss the company name and number on important documents. Although not legally required they do give a professional finish to important contracts and certificates.

Professionals such as Notary Publics and solicitors also use them to seal documents they have signed with their name and often a unique logo.

Anyone can use a company seal and it does not have to contain information relevant to a company, this is just the most common use.

Where to obtain a company seal
The most common supplier of company seals in the UK are company formation agents as it goes hand in hand with company formation services. A plier type company seal containing just text (no logo) can be obtained for less than £20.

Author Bio
Steve Harris works within the company formation and business advice industry and has a wide knowledge of this sector. Simple Formations is part of the SFS Group of Companies providing Company Seals

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Working a room

Working the Room and how to do it

Working the Room and how to do it

Let’s cover an area of working the room with which people often struggle… the actual moving around the room. Disengaging with one group and breaking into groups. Finally I will cover the bridge process and explain the importance of the follow up after we have met new people.
Perhaps you have recently had a chance to meet people at a business networking event or social event, a conference, or seminar and have taken the opportunity to go up to someone standing alone. The problem comes when you wish to extricate yourself from this person but don’t know how to go about it. Here let me give you some practical ideas. If you are both fellow guests at a function you don’t owe it to this person to spend the rest of the evening with them. Think about it for a moment, the chances are that this person wishes to move on as much as you do but like you they simply don’t wish to offend or cause any embarrassment.
You can do one of three of things:

  • After you have finished speaking you can simply say “Well, Jo, it’s been great meeting you, enjoy the rest of the evening. Please excuse me as I promised to go and talk to Gerry over there”.
  • You could say, “I’m going to get another drink, would you like to come?”
  • The coward’s way out is “Please excuse me, I need to go to the loo!” and make sure you move well away from the person.

Whichever you use please do it with respect, integrity and politeness. Good manners is essential when working the room and is good business; bad manners brings no business.

The important aspect here is to move around the room with or without your new found friend. Again can I remind you that if your conversation is dry, they too probably want to be off working the room as well. You are doing them a favour by using your superior business networking techniques

Using the second idea of moving to the bar is an opportunity to park the person with someone else or for them to park you. It’s rare both of you will be at an event where you don’t know anyone so moving to the bar usually has the desired effect. When you do bump into someone you know even though you are a guest at an event act as a host. Don’t just say “Hi Lou this is Jo” and leave it there. You have been chatting to Jo for some time and you obviously know Lou … so play host. Say something like this, “Lou let me introduce you to Jo who I’ve just met this evening. He has a fascinating business selling sand to Middle Eastern Companies and, Jo, Lou here and I have been friends for years. He runs a business helping growing exporters raise finance from people who are looking for high-risk high return opportunities”. These introductions are designed to get the two of them to talk quickly and with ease and reassurance. Who knows what may happen. You just might have created some potential for both of them? Business networking isn’t just about what you can do for yourself, it’s about what you can do for others. If you help someone, they will remember you when they hear of someone who needs your services. This of course makes it so much easier for you to move on and meet other people. This exercise is what I call parking. Like your car do it carefully, watch all angles and don’t hit anything!

So now you have a parked Jo with Lou you have freshened up your drink. You look around the room and you see clusters of people or groups chatting to each other.

“Help… What do I do next?”

It’s easy. Work the room! Look for a group of three people and move over to the edge of the circle. As you are moving towards the group, look at the faces of the people and decide who seems to be the most welcoming. Stand opposite that person at the edge of the group and smile. I can assure you the following will happen. The person you have smiled at will smile back and one or both of the other people will turn towards you and both will take one step to the side making a space for you. When you first do this, it’s not easy. I’m not pretending it is but it always works. Ask in a gentle voice “Good evening please may I join you”? Again I have to tell you, you will not be rejected. The chances are someone will put their hand out and introduce themselves. I often play a game at the start of a business networking seminar or prior to a sit down meal by asking my newfound friend if they would allow me to use them as a Guinea Pig. I get them to go up to people they don’t know, try out what I have just said and it always works. I do this simply to ensure that whenever I write about the matter or speak about it at the presentations and seminars I deliver that I feel confident in the advice I give.

Once you have successfully joined a group, don’t change the subject matter and wait for them to start asking you questions. Bear in mind again, the chances are these people are from the same business or have known each other for a long time but haven’t got the self-confidence to break away and meet new people… So you are a big relief for them!

When you are in a group, you will know the time to move on, instinct will tell you. I don’t need to. So go to the top of this article and remember the tips about working the room.

Author Bio
I qualified as a chartered accountant in 1971, aged 23 and stayed in practice for the next 30 years.

I ended my accountancy career as the senior partner on merger with a national firm on May 31 2000. The next day I set up Kintish to show people in the professional, financial and service-based communities how to attract more business and clients.

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