Global Strategic Planning

By M. Isi Eromosele

In order to respond to the opportunities and challenges of the global marketplace, most companies have to engage in the process of strategic planning. Strategic planning has been defined as a process that defines the direction a company will pursue within its chosen environment and guides the allocation of its resources and efforts.

To develop an effective strategic plan, a company must first define its mission. Second, it must conduct a situational assessment of the threats and opportunities to which the company can respond within the scope of its target market. At this stage, the company must also assess its own distinctive competencies.

Lastly, the company must also establish a set of priorities based on its business objectives that align with its market mission.

The Organizational Mission

Companies can establish missions that are either broad or narrow, but it is important to establish a mission with the greatest likelihood of success in a highly competitive marketplace.

Essential to a successful mission statement is the recognition of what the business value is and what its customer wants.

Organizational Strategies

The company can now begin to formulate its organizational strategies. This could include either growth market strategies or consolidation strategies. With growth market strategies, the company attempts to gain more sales from an existing business line or penetrate new markets.

An alternative growth perspective might lead the firm to develop a new product or service that could generate sales from existing customers. A company that implements a consolidation strategy is paring either the products or services it offer or shrinking the market it serves.

Market Growth Strategies

There are four broad strategies that can guide a company’s growth; they reflect the internal organization and external market conditions. Internal capabilities and services are represented by the product dimension. External market factors, a reflection of the marketplace analysis, are represented by the market dimension.

Using the above product/market matrix as a guide, there are four growth strategies to consider:

Market Penetration

The market penetration strategy involves increasing the sales of your present products and services in present markets. This is a useful approach when your current market is strong and growing. Success with this strategy would involve attracting new customers or converting new users.

Market Development

This strategy involves initiating sales of existing products and services in new markets. This strategy is implemented when your existing markets are stagnant in terms of growth and market share gains because of strong dominant competitors.

Product Development

Product development involves providing new products to existing markets. Organizations pursue this strategy to meet changing customer needs, to take advantage of new technologies or meet the needs of specific segments of the market.

Diversification

Diversification entails developing new products or services for new markets. This strategy is followed when the growth in existing markets is nearly saturated and is not growing.

Analyzing The Competitive Market

Within the context of strategic planning, companies must analyze their competition. Not only should they assess the existing competition but also the potential ones.

Competitive intensity is affected by four major forces: the threat of new entrants | bargaining power of suppliers | bargaining power of customers | the threat of substitute products or services.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group

Strategic Planning: The Essence of Success In Business

By M. Isi Eromosele

Businesses are going to be managed differently in the next millennium.  Organizations will be managed through the use of a highly integrated, holistic business operating system that is fast, flexible, and accountable. 

These companies will be hard on issues and soft on people.  It’s leadership that makes the difference in a company. A tremendous difference.

Strategic Model Planning

Success model planning is the one unique and imperative step that every company needs to complete as part of its strategic planning process.  With more traditional approaches, most organizations go straight to strategic plans, operating plans and numbers. 

Companies need to treat success model planning as a front-end exercise for strategic planning. Managers really have to know what success looks like if they are going to do

a good strategic plan. Success modeling is the ideal performance of a business benchmarked against best in class. 

The success model involves benchmarking on markets, portfolio, best-in-class measures, and, most importantly, gaps. Different groups within a company should be required to benchmark independently in order to discover true facts about themselves.

The traditional planning methods just don’t work and will not deliver satisfactory results.  The new methodology focuses more on developing and nurturing the ability to compete, picking a few target programs, driving for success, competing on time, and working toward more of a continuous strategic planning and budgeting type of process.

If the strategic planning process is spread out over an extended period of time, there is usually often tremendous disconnects between what was strategically imagined and the realities of resource constraints to execute the strategy. 

This often led to great disappointments during the budgeting phase of planning. To help eliminate this problem, expectations should be bounded with the success model front end and more closely tie budgeting to strategy.  The key is to make the boundaries large enough to encourage strategic thinking yet small enough to keep the thinking realistic.

Success Model Matrix

Success in different kinds of markets demands different strategic approach and has different results metrics. Use a Success Model 4x3 Matrix that recognizes and categorizes three kinds of markets and four resource approaches.

Analyze the 4x3 matrix by product/market and then roll up by product line, business unit, and the corporation can provide insights into how well a business entity is driving the success model criteria and what resource allocations will be required.

Pull all the information discovered to build an Analysis-Action-Impact-Management (AIM) chart, which is a strategic management tool.

The top left quadrant, Success Criteria/Trends, houses the benchmarking data.  The top right quadrant, Analysis, includes gaps and discontinuities.  Action, bottom left quadrant, is a thumbnail of the implementation.  And the fourth quadrant is impact, answering the

question:  What is the expected benefit, measure of success, and progress for each action?

All this information is essential to the success of a company’s strategic planning.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group

Building Global Competitiveness

By M. Isi Eromosele

To build sustainable global advantage, companies need to be involved in global collaboration. Global collaboration drive new revenue, quicken time to market and enhances innovation.

Global collaboration influences a company’s strategic implementations as well as financial growth. The effective adoption of this approach requires revaluation of traditional strategies and processes.

The competencies necessary for achieving market growth through collaboration with global partners are different from those required to be successful in cost reduction.

However, many companies continue to use the same strategies and processes to manage global collaboration projects as well as cost reduction ones. As such, they fail to obtain maximum benefit values from their implementations.

In order to implement an effective global collaboration program, a strategic company wide realignment needs to be created and implemented. Components of this realignment would include delineating the company’s global collaborative goals, adapting new business processes and establishing strategic partner relationships with other companies.

Additionally, project management techniques, communication processes and growth methodologies would need to be enhanced, considering the more complex interdependent nature of global collaborative business relationships.

A solid knowledge base would need to be built internally that encourages continuous learning, helping the company to build global collaborative competency in the shortest possible time.

In implementing a global collaborative program, a company would need to initiate a set of best practices that would ensure success. These are:

• Strategy Development
• Organizational Design
• Product Development Processes
• Project Management Techniques
• Platform Specifications
• Intellectual Property Management

Utilizing the above best practices will ensure that a company realizes the best value returns from their global collaboration relationships.

The drivers and enablers of the move to global collaboration strategy include:

• Increased complexity in the scope of technologies inherent within single products
• Low cost, yet highly educated labor force in emerging and developing countries
• Increased use of global technology principles and open architectures
• Development of powerful new collaboration tools and infrastructure

A lot of companies engage in some form of global collaboration simply to lower costs without a well articulated strategy. The result is a disjointed cost reduction strategy driven at a divisional level instead of company wide. Companies need to move towards an open, company-wide strategy that best leverages their collaborative competencies.

The global collaboration strategy will need to be aligned with the company’s business strategy. The participation of collaborative partners is essential during the strategy process. Specific areas of opportunities include acquiring capabilities and/or intellectual property not available in-house, being able to adjust and adapt resources as necessary and obtaining related knowledge for product, customer and market access.

A global collaborative strategy need to be linked to a company’s overall product development as well as research & development strategy. The business value available from global resources increases a company’s capabilities in handling the entire support of its product lines and the designing the key parts of new product architecture.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group

Business Flexibility For Corporate Growth

By M. Isi Eromosele

Flexibility within a corporate culture can be very significant in making sure that business opportunities are not missed. A flexible company would be primed and prepared to reduce unfavorable effects on it due to market events by taking immediate action. The objective is to build an adaptable, flexible organization that expects change events rather than one that is stunned and bewildered by unanticipated internal or global developments.

Change events are a constant fact of life in global business. This includes advances in globalization, communications, marketing processes, customer relations management and customer needs and demands. These developments are opening new global business opportunities, but they are also creating multiple challenges for national and global companies. These challenges may be simple to speak about, but are difficult to deal with.

Flexibility and adaptability must be made key components of any company’s growth strategy, enabling it to discover new global opportunities and respond efficiently. Failure to build these components into your company’s corporate culture will effectively hamper your company’s future growth. Companies need to make a shift to what is called "adaptive enterprise" corporate culture, crucial to the future growth capabilities of any company, regardless of size.

Adaptive enterprise calls for fostering a corporate environment that support recurring adjustments of policies and business processes in order to engender sustained competitive advantage. Technology will play an underpinning key role in making this happen. Robust resources for communications and development will certainly help your company as a whole positively react in response to change.

Even more importantly, these resources will help prepare you for a quick response to any type of changes that may occur. Additionally, they will help your company create changes in the business and market environments that will have your competition struggling to respond.

The ability to capitalize on global business opportunities and the ability to quickly respond to market threats are very important to the long-term growth of any company. As such, companies need to think of business flexibility as a key attribute in the formulation of their market and growth strategies.

Corporate entities tend to focus on developing business strength, comprising of issues such as financial lines of credit, smooth succession plans and business continuity plans, among others. However, since business flexibility is hard to measure, it is usually disregarded. This mindset has to change.

A good starting point for assessing your company’s flexibility is the articulation of what your business represents. A focus on your business mission will return you to changing ways of doing business within your industry as well as in your marketplace. An industry or market segment leader would already have the required systems in place to identify new opportunities. For other companies, additional resources would be needed for them to modify their operations and processes to anticipate changes in an increasingly competitive business and market environment.

Companies that are able to anticipate and react quickly to market developments are able to produce products and change marketing approaches that benefit them. The key is to leverage your competencies and resources in fostering an innovative and flexible corporate environment, while strengthening business processes and structures that would support profitable business growth.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group

Redefining Global Strategic Planning

By M. Isi Eromosele

The general concept of strategic planning had been to focus on corporate vision. The premise was that in order for a company to stay alive and grow, it must constantly delineate its products, markets and potential customers. This vision may include restructuring the fundamental base of the organization in order to realign itself to new market conditions, with focus on the needs of the customer versus the sale of the product. Formalized planning was used to stop businesses from just trying to replicate their previous successes, take advantage of new technologies and global markets to bring a higher level of functional organizational functionality into company processes.

During the past two years, the world has experienced a weakened economy, high energy prices, increased global competition and the advent of innovative technologies that transformed the way companies conducted business. Many companies responded by employing strategies of downsizing, re-engineering and re-focusing on quality. Emphasis was placed on efficiency and improvement of core competencies to improve profits and enhance productivity. However, little progress was made in implementing competitive advantage strategies to differentiate companies and their products from those of competitors.

Today, strategic planning requires the involvement of line and staff managers who are responsible for differing departments within the company. Additionally, vision and strategic planning components need to be implemented. These include:

• Core Competencies - with unwavering focus on elevating functional and organizational processes that would give the business competitive advantage
• Business Collaboration - implementing the concept of strategic alliances with customers, suppliers and even competitors to achieve increased growth
• Value Relocation - the movement of business opportunities within industries and companies
• Strategic Intent - an elongated business goal
• Inherent Opportunities - identifying areas of growth that fall between the responsibilities of business units because there is no skills or responsibility match

A major reason why strategic planning often fails is that it uses existing relationships, business paradigms and functional processes. As such, creativity and deep insights are disregarded. The results: What had been supposedly working is continued; what does not exist is not invented; what has not been applied is not thought about. This has to change.

Economies of scale requirements has made modern corporations so large and geographically dispersed that top management are generally unaware of what their middle managers are doing or what processes are being employed. What companies need to do in the process of strategic planning is to gather intelligence about them, turn that data into information and generate a spark of insight that would result in a cohesive vision/business strategy. This would then be implemented in a way that brings better controls to an organization that is seemingly out of strategic alignment.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group

Enabling Capital Structure To Support Global Strategy

By M. Isi Eromosele

A company’s ratio to debt equity must support its business strategy and should not be used to pursue tax breaks.

When a company has a bad capital structure, this represents a potential harm to its operations and business strategy. Rather than rely on capital structure to create value on its own, companies must closely align it with their global business strategy by striking a balance between tax savings that debt can deliver and the greater flexibility of equity. Companies are capable of creating more value through making their operations highly efficient rather than relying on creative financing.

Impact Of A Reliable Capital Structure

A company’s overall value is affected by its capital structure through the impact it has on the firm’s operating cash flows and cost of capital. In most countries, the expense of paying interest on debt is tax deductible. As such, a company may reduce its after-tax cost of capital by increasing debt relative to its equity, facilitating a rise in its inherent value. It is a fact that the value of tax benefits is relatively small over the relevant levels of interest coverage.

The consequence of accumulative debt on a company’s cash flow is of a smaller amount but more significant. Carrying debt usually increases a company’s relative value because debt inflicts discipline that requires a company to make recurring interest and principal payments. If a company accumulates too much debt, its relative value is reduced, which in turn limits its flexibility to make value-creating investments, including capital expenditures and acquisitions, as well as spend on other business intangibles such as Research & Development, sales and marketing.

Proper management of capital structure requires a company to make a trade-off between financial flexibility and fiscal discipline. Mature companies with steady and predictable cash flow should include more debt in their capital structure. Companies that face high levels of uncertainty should carry less debt, which would give them more flexibility to exploit investment opportunities.

When a company’s share is under- or overvalued, they could use the company’s underpinning capital structure to create value, either by buying back undervalued shares or by using overvalued shares instead of cash to pay for acquisitions.

Framework For Developing Capital Structure

To develop its capital structure, a company must recognize its future revenues and investment requirements. Once these fundamentals are understood, the company can then begin to consider changing its capital structure to support its global business strategy. The company’s decision making process could include the following steps:

• Estimate its financing deficit or surplus. They will need to forecast the company’s financing deficit or surplus from its operations and strategic investments over the course of its business cycle.
• Set a target credit rating. Set a target credit rating and estimate the corresponding capital structure ratios. Then they could translate the target credit rating to a target interest coverage ratio.
• Develop a target debt level over the business cycle. Set a financing debt cushion of spare debt capacity for contingencies and unforeseen events.
• Test this forecast against a downside scenario. Arrive at an acceptable target debt level which allows the company to maintain an investment-grade rating under the downside scenario

The final step in this approach is to determine how the company should move to the target capital structure. This transition involves deciding on the appropriate mix of new borrowing, debt payment, dividends, share repurchases and share issuances over the next few years.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group

Applying Strategic Foresight In Global Business

By M. Isi Eromosele

What's the difference between strategic planning and strategic foresight? Its all a matter of direction. Planning considers a multitude of factors in the present environment, measures them and then extrapolates the data into the future. On the other hand, foresight considers first what the future might hold and gives you a target to plan back into the present. Planning is very inward-focused. Foresight is very outward-focused.

There has perhaps never been a time in human history when strategic foresight is more needed. Precious little guidance is available for executives, analysts, and educators seeking the best way to plan and prepare for the future. Because the future is not predetermined or predictable, future outcomes can be influenced by our choices in the present and that is where strategic foresight comes into play.

At once highly creative and methodical, strategic foresight gives organizations the ability to create and maintain a high-quality forward view to detect threats and opportunities before they reach mainstream awareness, to guide policy, and to shape strategy. The ultimate goal of strategic foresight is to make better, more informed decisions in the present, making it the ideal tool for exploring new markets, products, and services, or more generally for successfully navigating the rapids of today's constantly shifting, increasingly complex global environment.

Six phases of Strategic Foresight

Framing

This important first step enables organizations to define the scope and focus of problems requiring strategic foresight. By taking time at the outset of a project, the team analyzing a problem can clarify the objective and determine how best to address it.

Scanning

Once the team is clear about the boundaries and scope of an activity, it can scan the internal and external environments for relevant information and trends.

Forecasting

Most organizations, if not challenged, tend to believe the future is going to be pretty much like the past. When the team probes the organization's view of the future, they usually find an array of unexamined assumptions that tend to converge around incremental changes. The task, then, is to challenge this view and prod the organization to think seriously about the possibility that things may not continue as they have and in fact, rarely do. Considering a range of potential futures is the only surefire way to develop robust strategies that will position the organization securely for any future that may occur.

Visioning

After forecasting has laid out a range of potential futures, visioning comes into play, generating the organization's ideal or preferred future and starting to suggest stretch goals for moving toward it.

Planning

This is the bridge between the vision and the action. Here, the team translates what could be into strategies and tactics that will lead toward the preferred future.

Acting

This final phase is largely about communicating results, developing action agendas, and institutionalizing strategic thinking and intelligence systems, so the organization can nimbly and continually respond to the changing external environment.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2011 Oseme Group