V The process of developing a game plan to

guide a company as it strives to accomplish its

vision, mission, goals, and objectives and to
keep it from straying off course.
V Give owners a blue print for matching their
companies· strengths and weaknesses to the
opportunities and threats in the environment.
V The aggregation of factors that sets a small
business apart from its competitors and gives it
a unique image in the market.
V Every small firms must establish a plan for
creating a unique image in the minds of it·s
potential customers
V Omall companies have a variety of natural
advantages over their larger competitors ²
fewer product lines, a better-defined customer
base and a specific geographic market area.
V Omall business owners usually are in close
contact with their customers, giving them
valuable knowledge on how to best serve their
needs and wants.
V Omall businesses should find that strategic
management comes more naturally to them
than to larger companies.
Otrategic Management can increase a small firm·s
effectiveness, but owners first must have a
procedure designed to meet their needs and
their business·s special characteristics. Because
of their size and their particular characteristics
² resource poverty, a flexible managerial style,
an informal organizational structure, and
adaptability to change ² small businesses need
a different approach to the strategic
management process.
The strategic management procedure for a small business should
include the following features:
V Use a relatively short planning horizon ² two years or less for
most small companies.
V Be in formal and not overly structured; a ´shirtsleeveµ approach is
ideal.
V Encourage the participation of employees and outside parties to
improve the reliability and creativity of the resulting plan.
V Focus on the customer.
V Do not begin with setting objectives because extensive objective
setting early on may interfere with the creative process of strategic
management.
V Focus on strategic thinking, not just planning, by linking long-
range goals to day-to-day operations. Otrategic thinking
encourages creativity, innovation, and employee involvement in
the entire process.
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V The purpose is to focus everyone·s attention on
the same target and to inspire them to reach it.
V It touches everyone associated with the
company ² employees, investors, lenders,
customers, and the community.
V It is an expression of what the owner stands for
and believes in.
V It is the result of an entrepreneur·s dream of
something that does not exist yet and the
ability to paint a compelling picture of that
dream for everyone to see.
 clearly defined vision helps a company in three ways:
v Vision provides direction. Entrepreneurs who spell out the
vision for their company focus everyone·s attention on the
future and determine the path the business will take to get
there.
v Vision determines decisions. The vision influences the
decisions, no matter how big or how small, that owners,
managers, and employees make every day in a business. This
influence can be positive or negative, depending on how well
defined the vision is.
v Vision motivates people.  clear vision excites and ignites
people to action. People want work for a company that sets its
sight high.
VVision is based on entrepreneur·s values; truly
visionary entrepreneurs see their companies·
primary purpose as more than just ´making
moneyµ
VThe best way to put values into action is to create
a written mission statement that communicates
those values to everyone the company touches.
V n enduring declaration of a company·s purpose that
addresses the first question of any business venture:
What business am I in?
V s an enduring declaration of a company·s purpose, a
mission statement is the mechanism for making it clear
to everyone the company touches ´why we are hereµ
and ´where we are goingµ
V Without concise, meaningful mission statement, a
small business risks wandering aimlessly in the
marketplace, with no idea of where to go or how to get
there. The mission statement sets the tone for the entire
company
V What are the basic beliefs and values of the organization? What do
we stand for?
V Who are the company·s target customers?
V What are our basic products and services? What customer needs
and wants do they satisfy?
V Why should customers do business with us rather than the
competitor down the street (or across the town, on the other coast,
on the other side of the globe)?
V What constitutes value to our customers? How can we offer them
better value?
V What is our competitive advantage? What is it source?
V In which markets (or market segment) will we choose to compete?
V Who are the key stakeholders in our company and what effect do
they have on it?

VTo be effective, a mission statement must become a natural part of

the organization, embodied in the minds, habits, attitudes and
decisions of everyone in the company every day.
 company may have a powerful competitive
advantage, but it is wasted unless
V the owner has communicated that advantage to
workers, who in turn, are working hard to
communicate it to customers and potential
customers and
V customers are recommending the company to
friends because they understand the benefits
they are getting from it that they cannot get
elsewhere
v Äeep it short.
v Äeep it simple.
v Get everyone involved.
v Äeep it current.
v Make sure your mission statement reflects the values and beliefs you
hold dear.
v Make sure your mission statement includes values that are worthy of
your employee·s best efforts.
v Make sure your mission statement reflects a concern for the future.
v Äeep the tone of the mission statement positive and upbeat.
v Consider using your mission statement to lay an ethical foundation for
your company.
v Look at other companies· mission statements to generate ideas for
your own.
v Make sure that your mission statement is appropriate for your
company·s culture.
v Use it.
V Unique set of lasting capabilities that a company develops in key
operational areas, such as quality, service, innovation, team
building, flexibility, responsiveness, and others, which allow it to
vault past competitors.
V The core competencies become the nucleus of a company·s
competitive advantage and are usually quite enduring over time.
V To be effective, these competencies should be difficult for
competitors to duplicate, and they must provide customers with
some kind of perceived benefit.
V Omall companies ¶ core competencies often have to do with the
advantage of their size ² agility, speed, closeness to their
customers, superior service, and ability to innovate.
V The key to success is building these core competencies (or
identifying the ones a company already has) and then
concentrating them on providing superior service and value for its
target customers.
nswering the following questions will help
entrepreneurs focus their resources on creating or
reinforcing their companies· core competencies.
V What our target customers· characteristics?
V Why do they buy our goods or use our service?
V What unique skills, knowledge, service, or other
resources do we possess that would improve our target
customers· lives?
V How can we use those resources to offer value to
customers that our competitors cannot?
V How loyal are they to their present supplier(s)?
V What factors cause them to increase or decrease
purchases?
V To what extent does our market focus build on skills
that we already have?
V What skills must we develop to serve our customers in
the future?
V  strategy that involves carving up the mass
market into smaller, more homogeneous units
and then attacking certain segments with a
marketing strategy designed to appeal to its
members.
 

 



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V First identify the characteristics of two or more
groups of customers with similar needs or
wants.
V Then the owner must verify that the segments
are large enough and have enough purchasing
power to generate a profit for the firm because
segmentation is useless if the firm cannot earn
a profit serving its segments.
V Finally, the owner must reach the market.
V  technique that involves influencing
customers· perceptions to create the desired
image for a business and its goods and
services.
V Proper positioning gives the small business a
way of setting itself apart from the competition,
the foundation for developing a competitive
advantage.
V Positive internal factors that a company can use
to accomplish its mission, goals, and objectives.
V Öegative internal factors that inhibit the
accomplishment of a company·s mission, goals,
and objectives.

V Vn organization·s strengths should originate

in the core competencies that are essential to
remaining competitive in each of the market
segments in which the firm competes
V VThe key to building a successful strategy is
using the company·s underlying strengths as
its foundation and matching those strengths
against competitors· weaknesses.
þne effective technique for taking the strategy
inventory is to prepare a ´balance sheetµ of the
company·s strengths and weaknesses. This
balance sheet should analyze all key
performance areas of the business ² personnel,
finance, production, marketing, product
development, organization etc.
O
   

    Vthis analysis should
 
   
  give owners a more
 

  

 realistic perspective
of their businesses,
pointing out
foundations on
which they can
build future
strengths and
obstacles that they
must remove for
business progress.
V Positive external options that a firm can exploit
to accomplish its mission, goals, and objectives
V When identifying opportunities, an
entrepreneur must pay close attention to new
potential markets. re competitors overlooking
a niche in the market? Is there a better way to
reach customers? Can we develop new
products that offer customers better value?
What opportunities are trends in the industry
creating?
V Öegative external forces that inhibit a
company·s ability to achieve its mission, goals,
and objectives.
V Threats to the business can take a variety of
forms, such as new competitors entering the
local market, a government mandate regulating
a business activity, an economic recession,
rising interest rates, technological advances
making a company·s product obsolete, and
many others
V ]elationships between a controllable variable
(e.g. plant size, size of sales force, advertising
expenditures, product packaging) and a critical
factor influencing the firm·s ability to compete
in the market.
VFor example, one restaurant owner identified the
following key success factors:

V Tight cost control

V Trained, dependable, honest in-store managers
V Close monitoring of waste
V Careful site selection
V Maintenance of food quality
V Consistency
V Cleanliness
V Friendly and attentive service from well-
trained wait staff.
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Entrepreneurs must use the information gathered to analyze their businesses, their
competitors, and their industries in order to isolate these sources of competitive
advantage.
Business is like a battlefield. nd if you want to
win it, you have to know who you are up
against. This style is significant for several
reasons. þne is to avoid surprises from existing
competitors· new strategies. Two, to identify
potential competitors. It will also help you
improve your reaction time to competitors·
actions. Lastly, you will be able to anticipate
your rivals· next strategic moves.
Two things are required in this stage. The first
one is competitor analysis. This involves
gathering information on the situation of your
rivals, OWþT analysis, its buyers, financial
resources, etc. These things will be your
comparison or benchmark in developing your
product or service.
The cost of gaining rivals· information can be
minimal. Look through magazines, Internet,
customers, suppliers, libraries and tv are some
of the sources you can consult to get what you
need to know. With this information, come up
with a competitive profile matrix and evaluate
how far ahead or away you are from your
competitors.
Before an entrepreneur can build a
comprehensive set of strategies, he must first
establish business goals and objectives, which
give targets to aim for and provide a basis for
evaluating a company·s performance. Without
them, the owner cannot know where the
business is going or how well it is performing.
Goals are broad, long-range attributes that a
business seeks to accomplish; they tend to be
general and sometimes abstract. þbjectives, on
the other hand, are more specific targets of
performance which usually concern
profitability, productivity, growth, efficiency,
markets, and financial resources, physical
facilities, organizational structure, employee
welfare, and social responsibility. It is
important to establish priorities to avoid
conflict with one another.
þbjectives must be specific in the sense that
they are precise and quantifiable. They should
also be measurable wherein you would be able
to evaluate your progress. They are also
assignable to individuals who could
accomplish and handle the responsibility well.
þbjectives are also realistic yet challenging.
They should be timely and lastly, they should
be written down.
It would be best if the formulation of objectives
is a product of managers and employees
integration.
V a road map of the actions an entrepreneur
draws up to fulfill a company·s mission,
goals and objectives
V the mission, goals and objectives are the ends,
the strategy are the means
V master plan that covers all the major parts of
the organization and ties them together into a
unified whole
V the plan must be action oriented
V a successful strategy is comprehensive and well
integrated
´  flawed strategy-no matter how brilliant the
leadership, no matter how effective the
implementation-is doomed to fail.  sound
strategy, implemented without error, wins
every time.µ ² Joseph Picken and Gregory Dess
(Mission Critical: The 7 Otrategic Traps That
Derail Even the Omartest Companies)
a strategy in which a company strives to be the
 34   
relative to its competitors in
the industry.
v (+) Low-cost leaders have a competitive advantage
in reaching buyers whose primary purchase
criterion is 
*
v (-) Oometimes a company focuses exclusively on
lower manufacturing costs w/o considering the
impact of purchasing, distribution or overhead
costs
v (-) misunderstanding the firm·s true cost drivers
a strategy in which a company seeks to build
customer loyalty by positioning its goods or
services in a 5
 

 
 .
V (+)  firm strives to be better than its
competitors at something that customers
value.
V (-) Oustainability of a product or service·s
differentiation
V (-) overdifferentiating and charging so much
a strategy in which a company selects one or more market
segments, identifies customers· special needs, wants,
and interests, and approaches them with a good or
service designed to excel in meeting those needs,
wants and interest.
V (+) the focusing firm specializes in serving a specific
target segment or niche
V (-) Companies must struggle to capture a large enough
share of a small market to be profitable
V (-) there is danger of larger competitors entering the
market and eroding it
V Implement the strategy by dividing the plan
into projects

V Involving employees and delegating adequate

authority to them is essential because these
projects affect them most directly.
V Control the strategy- plans created in the
strategic planning process become the
standards against which actual performance
is measured
V Identify and track key performance
indicators
V Balanced Ocorecard: set of measurements
unique to a company that includes both
financial and operational measures and
gives manager a quick yet comprehensive
picture of the company·s performance