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.
II.
III.
IV.
V.
VI.
VII.
Business Enterprise Focus
Strategic Direction
Marketing and Channel Linkages
Financial
Organizational Structure
Social Responsibility
Managerial Style/Lifestyle
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
I.
Business Enterprise Focus
1. Product
2. Product/process technology
Strategic Business Planning for Commercial Producers
Alternative Strategic Focus
Strategies
Commodity Strategy
Differentiated Strategy
Production Emphasis
Manufacturing Mentality
End-User Focus
Distribution/Marketing
Mentality
Low Cost Producer
Large Scale Operation
Outsource Resources
Value/Added Production
Smaller Scale Operation
Own Resources
Open/Impersonal Markets
Downside Price Risk
Independent Decision-Making
Negotiated Markets
Relationship Risk
Interdependent Decision
Making
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
II. Direction
1. Growth
2. Delay
3. Retrenchment
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
III. Marketing and Channel Linkages
1.
2.
3.
Marketing Your Firm
Merchandising and Selling
Products/Services
Sourcing and Purchasing Resources
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
IV. Financial
1. Business/Legal Choices
2. Financing/Leasing Options
3. 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 Responsibility
1.
2.
3.
Communicating Your Good stewardship
Practices
Being Involved in the Community
Understanding the Needs and Concerns of
Your Neighbors
Strategic Business Planning for Commercial Producers
Key Strategic Decisions
VII. Managerial Style/Lifestyle
1.
2.
3.
4.
5.
6.
Time/Labor Contribution
Living Expenditures
Risk/Stress Level and Attitudes
Learning New Skills
Organization Culture
Leadership
Strategic Business Planning for Commercial Producers
Strategic Direction
Growth, Delay, or Retrenchment
Strategic Business Planning for Commercial Producers
Focus on Strategic Direction
•
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?
Strategic Business Planning for Commercial Producers
Strategic Direction Options
Strategic Direction
Growth
Retrenchment
Delay
Decision
Trigger
Concentration
Turn
around
Diversification
Pause
Vertical Horizontal Related Unrelated
No Change
Profit
Captive
Company
Exit
Strategic Business Planning for Commercial Producers
Strategic Direction Options
Growth
Concentration
Vertical
Diversification
Horizontal
Integrate
Intensify
Network
Expand
Cooperatives
Value-Added
Investments
Replicate
Network
Related
Diversify into
Related
Agricultural
Production
Enterprises
Capture
Synergies
Unrelated
Non-Ag
Industries
Ignore synergy
For cash flows
Or
Risk reduction
Strategic Business Planning for Commercial Producers
Strategic Direction Options
Delay
Decision
Trigger
Pause
No Change
Profit
Strategic Business Planning for Commercial Producers
Strategic Direction Options
Retrenchment
Turn around
Contraction
Consolidation
Outsourcing
Captive
Company
Sole Supplier
Preferred Provider
Contract Grower
Exit
Sellout
Divest
Bankruptcy
Liquidation
Strategic Business Planning for Commercial Producers
Which Units to Grow?
Business Unit Growth Matrix
–
–
Based on EFAS and IFAS
4 Quadrants
•
Cash Cows – Low EFAS, High IFAS
–
•
Stars – High EFAS, High IFAS
–
•
Normally Growth Strategy
Question Marks – High EFAS, Low IFAS
–
•
Normally Delay Strategy
Growth or Delay Strategy
Dogs – Low EFAS, Low IFAS
–
Retrenchment Strategy
Strategic Business Planning for Commercial Producers
Business Unit Growth Matrix
High
Star
?
EFAS
Cash Cow
Dog
Low
High
IFAS
Low
Strategic Business Planning for Commercial Producers
How Do We Grow?
Growth Options Matrix
–
–
Based on Customers and Products
4 Quadrants
•
Market Penetration
–
–
•
Market Development
–
–
•
Same Product to New Customers
Horizontal and/or Vertical Growth
Product Development
–
–
•
More of Same Product to Same Customers
Horizontal Growth
New Product to Same Customers
Vertical or Horizontal Growth
Total Diversification
–
–
New Product to New Customers
Related or Unrelated Diversification
Strategic Business Planning for Commercial Producers
Growth Options Matrix
Customer Focus
New
Market
Development
Market
Penetration
Total
Diversification
Product
Development
Old
Old
Product/Service
New
Strategic Business Planning for Commercial Producers
What Do We Give Up?
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
Strategic Business Planning for Commercial Producers
Outsourcing Matrix
Yes
(Key Activities)
Get Capability
Keep in-house
Collaborate
Partner
Exit / Buy
Consider Selling
Possibly
(Emerging
Activities)
No
(Basic
Activities)
Weak
Strong
Capability and Cost (relative to others)
Adapted From Richard Insinga and Michael Werle, “Linking Outsourcing and Strategy.”
Strategic Business Planning for Commercial Producers
The Value Plate
Firm Infrastructure
Human Resource Management
Technological Development
Procurement
Relationship with suppliers
Relationship with buyers
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