Download - Strategic Business Planning for Commercial Producers What Do You Need to Make Strategic Choices?
Strategic Business Planning for Commercial Producers
What Do You Need to Make Strategic Choices?
Strategic Business Planning for Commercial Producers
Objectives
• Present key decisions and their basic options
• Provide tools for selecting a strategy in your business
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
I. Business Enterprise FocusII. Strategic DirectionIII. Marketing and Channel LinkagesIV. FinancialV. Organizational StructureVI. Social ResponsibilityVII. Managerial Style/Lifestyle
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
I. Business Enterprise Focus1. Product2. Product/process technology
Strategic Business Planning for Commercial Producers
Alternative Strategic Focus Strategies
Commodity Strategy
Differentiated Strategy
Production Emphasis End-User Focus
Manufacturing Mentality Distribution/Marketing Mentality
Low Cost Producer Value/Added Production
Large Scale Operation Smaller Scale Operation
Outsource Resources Own Resources
Open/Impersonal Markets
Negotiated Markets
Downside Price Risk Relationship Risk
Independent Decision-Making
Interdependent Decision Making
Strategic Business Planning for Commercial Producers
II. Direction1. Growth2. Delay3. Retrenchment
Key Strategic Decisions
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
III. Marketing and Channel Linkages
1. Marketing Your Firm2. Merchandising and Selling
Products/Services3. Sourcing and Purchasing
Resources
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
IV. Financial1. Business/Legal Choices2. Financing/Leasing Options3. Equity Sources
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
V. Organizational Structure– Determining the Chain of
Command– Assigning Responsibility– Giving Authority to Those with
Responsibility
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
VI. Social Responsibility1. Communicating Your Good
stewardship Practices2. Being Involved in the Community3. Understanding the Needs and
Concerns of Your Neighbors
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
VII. Managerial Style/Lifestyle1. Time/Labor Contribution 2. Living Expenditures3. Risk/Stress Level and Attitudes4. Learning New Skills5. Organization Culture6. Leadership
Strategic Business Planning for Commercial Producers
Strategic Direction
Growth, Delay, or Retrenchment
Strategic Business Planning for Commercial Producers
• Common Direction Questions
– Should we grow?– Which business units should
we grow?– How do we grow the
business unit?– What activities, if any,
should we give up to grow?
Focus on Strategic Direction
Strategic Business Planning for Commercial Producers
Strategic Direction Options
Strategic Direction
Delay
Pause
DecisionTrigger
No Change Profit
Growth
Concentration Diversification
Vertical Horizontal Related Unrelated
Retrenchment
Turn around Exit
CaptiveCompany
Strategic Business Planning for Commercial Producers
Strategic Direction Options Growth
Concentration Diversification
Vertical Horizontal Related Unrelated
Integrate
Network
Cooperatives
Value-AddedInvestments
Intensify
Expand
Replicate
Network
Diversify intoRelated
AgriculturalProductionEnterprises
CaptureSynergies
Non-AgIndustries
Ignore synergy
For cash flowsOr
Risk reduction
Strategic Business Planning for Commercial Producers
Strategic Direction Options
Delay
Pause
DecisionTrigger
No Change Profit
Strategic Business Planning for Commercial Producers
Strategic Direction Options
ContractionConsolidationOutsourcing
Sole SupplierPreferred ProviderContract Grower
SelloutDivest
BankruptcyLiquidation
Retrenchment
Turn around ExitCaptiveCompany
Strategic Business Planning for Commercial Producers
Business Unit Growth Matrix– Based on EFAS and IFAS– 4 Quadrants
• Cash Cows – Low EFAS, High IFAS– Normally Delay Strategy
• Stars – High EFAS, High IFAS– Normally Growth Strategy
• Question Marks – High EFAS, Low IFAS
– Growth or Delay Strategy• Dogs – Low EFAS, Low IFAS
– Retrenchment Strategy
Which Units to Grow?
Strategic Business Planning for Commercial Producers
Business Unit Growth Matrix
IFASHigh
High
Low
Low
EFAS
Star ?
Cash Cow Dog
Strategic Business Planning for Commercial Producers
Growth Options Matrix– Based on Customers and Products– 4 Quadrants
• Market Penetration– More of Same Product to Same
Customers– Horizontal Growth
• Market Development– Same Product to New Customers– Horizontal and/or Vertical Growth
• Product Development– New Product to Same Customers– Vertical or Horizontal Growth
• Total Diversification– New Product to New Customers– Related or Unrelated Diversification
How Do We Grow?
Strategic Business Planning for Commercial Producers
Growth Options Matrix
Old
New
Old
New
Market Penetration
ProductDevelopment
MarketDevelopment
Total Diversification
Product/Service
Cu
sto
mer
Focu
s
Strategic Business Planning for Commercial Producers
Outsourcing Matrix– Based on Core Competencies
and Competitive Advantage– Source of Competitive
Advantage?• No = a Basic Activity• Possibly = an Emerging Activity• Absolutely = a Key Activity
– Competency?• Weak• Strong
What Do We Give Up?
Strategic Business Planning for Commercial Producers
Outsourcing Matrix
Adapted From Richard Insinga and Michael Werle, “Linking Outsourcing and Strategy.”
Sou
rce
of C
omp
etit
ive
Ad
van
tage
Capability and Cost (relative to others)
Yes(Key
Activities)
Possibly(Emerging Activities)
No(Basic
Activities)
Get Capability
Collaborate
Exit / Buy
Keep in-house
Partner
Consider Selling
Weak Strong
Strategic Business Planning for Commercial Producers
Firm Infrastructure
Human Resource Management
Technological Development
Procurement
Inbo
und
Log
isti
cs
Ope
rati
ons
Out
boun
d L
ogis
tics
Mar
keti
ng&
Sal
es Serv
ice
MA
RG
IN
MA
RG
IN
Supp
ortin
g
Activ
ities
Prim
ary
Activ
ities
Relationship with suppliers
Relationship with buyers
The Value Plate
Strategic Business Planning for Commercial Producers
Summary
• Doing things right versus doing the right things.
• Choosing what to do and what not to do.
• Answering the what, how, who, why, and when of strategy.
Strategic Business Planning for Commercial Producers
Strategic Business Planning for Commercial Producers