Corporate Strategy and Software
Written by: Jet Eloriaga
Posted Feb 16, 2022
Ideas
SWOT
During the planning stage a very common and useful tool is the SWOT (strength, weakness, opportunites, threats) analysis. For each of these areas of concern, the firm considers both the internal, meaning within its own resources, and external which are those outside its organization.
In establishing its strengths and weakneses a business application, a software that is, must present in easily understandable formats perhaps at the minimum the organization's structure including the number of personnel in each department and position and the firm's assets and liabilities. Having too much or too few of human resources can both be a strength or a weakness and it will be up to the executive's wisdom to decide, but the numbers should be easily and readily available. Needless to say, lack of understanding of the firm's financial standing can be fatal to whatever strategy the top management is planning for.
In assessing existing and possible opportunities and threats, the software must report key information about the firm's existing and untapped yet feasible market, its size and demographics, any relevant news, existing laws and external setup that may in one way or another provide either boosts or constraints to the firm's products and services. A Customer Relationship Management (CRM) system should easily provide the demographics if the firm is already equipped with one. As far as consolidating news to make use of them to possibly determine any trend or detect upcoming threats and opportunities, a software can provide storage of links and along with them some descriptive overview of what is in the linked URL. Such a collection will serve a lot better than a simple listing in say a spreadsheet file. There are just too many ways that raw data stored in a real database can be processed that are simply not possible with a mere listing.
MISSION AND OBJECTIVES
The firm's raison d'etre should be clear from its mission statement. What it aims to accomplish should be stated with emphasis on the benefits of the market that it hopes to serve rather than a mere statement of actions it plans to do. It should reflect or derive from the organization's competitive advantage and what distinguishes itself from the others of the same industry or purpose.
The final mission statement will be referred to as controls are implemented later to ensure its realization. It is then in the establishment of controls that software will be of invaluable use.
Having defined the mission statement, the next step would be translating it into quantifiable objectives which the ensuing day to day operations should be aiming for. To begin with, the objectives should be arrived at with due consideration of the numbers noted during the swot analysis. As such the numbers stated in these objectives are now within the reins of the software to monitor and control.
The accomplishment of these objectives, if and when they are completed, is the realization of the firm's mission statement.
STRATEGIC PLANNING
How the organization plans to accomplish its long term objectives will be made clear by its choice of what product marketing strategy or strategies it will adopt. There are at least four directions to choose from:
- to promote more purchases of its current products to existing customers (market penetration)
- to promote its current products to new customers (market development)
- to develop and promote new products to its current customers (product development)
- to develop and promote new products to new customers (diversification)
Needless to say these alternatives are not to be taken as mutually exclusive paths. Indeed, most businesses will be expending efforts on each of them albeit with varying amount of resource allocations.
As a definite output of the firm's chosen direction, it will come up with the product portfolio that it will maintain and develop.
Now deciding on the strategy requires more than deciding on the product marketing route. The firm must also determine its competitive strategy - that is, how it intends to manage or handle the forces that determine or at times dictate what products will be worth anything in the market.
The reality is that the firm's products and services may not be very hard for new businesses to produce and sell to the market (threat of new entrants). Indeed, it may not even be the exclusive provider to begin with (threat of rivalry) and the competition will be constantly coming up with new threats that may affect the firm's market performance.
In addition, new products and services may come up from elsewhere that may compete with, or worse replace, the firm's products and services (threat of substitutes).
Finally, both the buyers of the products and the providers of any part in the supply chain of what the firm is selling usually dictate what sells and for how much (bargaining power).
A business software that maintains data about existing competition, the price levels of similar products as well as the component items used to produce the firm's products or deliver its services will be an indispensable tool for an executive deciding on what actions to take as the above mentioned threats unfold or even before they do. But what functions to look for in a software will be determined by the strategy that the firm will decide to take up.
Three major routes are available:
- The firm will make every effort to make its products and services stand out from the rest (differentiation),
- the firm will undertake measures that will result in operational efficiency to make it possible to offer their products and services for the lowest price in the market (low cost leadership), or
- the firm will focus its efforts on some chosen segment of the market, knowing as much about their wants and needs and delivering these at the optimum price (focus).
With software that is able to determine which part of an enterprise is producing the most waste, the first step in making a business process as efficient as possible, locating the source of the problem, will have been taken. When a product or service is properly defined by its component parts and related processes, the work of identifying anything that is non-value adding is greatly simplified (low cost leadership).
With a good CRM, it becomes almost effortless for a firm to determine how its next product or service will rate as far as its selected market is concerned (focus).
SOFTWARE GROWS WITH THE BUSINESS
As hopefully it has been elucidated here, software does not become valuable, if not essential, late in the life of a business but rather from the day its overall direction is still being planned out. I have had the privileged learning experience of having developed customized software for both an existing enterprise and one that is yet in its very beginning stages. The difficulty of adopting to more efficient processes that are enforced or enabled by software is greater for the case when the people are already used to what needs changing or fixing. It is best when business and software grow together.