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Strategic Planning and Strategic Management
| Strategic Management |
Strategy - Preparing for the Future while Surviving the Present
Some latest "buzz words" from Business Week and other comments and observations on Strategic Planning, plus
knowledge-based information on select important strategic management aspects in business processes.
Table of Contents
- Value Migration (interesting aspect of the question, "Do businesses understand?")
- Strategic Partnering and Co-Evolution (A new concern about an old concept.)
- White Space Opportunity (No, it is not a new country for white people.)
- Business Eco-systems (No, it is not about the green plants in the office.)
Value Migration
The ultimate purpose in developing highly efficient operations is to grow the business and capture a larger market
share. But what market? And do we truly understand opportunities that may exist? The last decade or so has been
filled with re-engineering efforts and many new productivity approaches discussed in other AllenWeb pages. The
buzz word "value migration" comes to mind. In some industries, market "growth" is stagnant. This is even a more
severe situation where this buzz word has significant application in a company's survival. By definition, value
migration is "the movement of growth and profit opportunities from one industry player to another". We have
witnessed this in the transportation industry for decades.
Strategic Partnering and Co-evolution
Strategic Partnering is the recent trend with the purpose of reducing costs and increasing market share. This is all
part of the strategic planning and management that any company must do to remain a viable cost-effective entity in
the current environment. But there is a new wave of thinking out that embraces competitors and suggests an
opportunity for growth that may be walking on the fringe of legal review (reference to working with competitors due
to possible pricing collusion). This "co-evolution" theory is "the notion that by working with direct competitors,
customers, and suppliers, a company can create new businesses, markets, and industries". We have witnessed this
in the VSA (vessel sharing agreements) among shipping companies and the ocean freight conferences as they have
joined together in the past to develop new opportunities but more often it was to survive downturns in markets
and/or be more cost-effective in the face of depressed freight rates.
White Space Opportunity
One of the phenomenon witnessed over the last couple of decades has been the "diversification" by quite a few
major corporation into everything and anything beyond core competencies. This is not to be confused with vertical
and horizontal integration that appears rational based on the core business. Another new buzz word is out. It is
"white space opportunity" which suggests there are "new areas of growth possibilities that fall between the cracks
because they don't naturally match the skills of existing business units". If corporate America has learned anything,
it has been to stay out of areas where it doesn't have the skill sets. So how does one pursue these cracks, how
does one develop profitable diversification in developing these "unnatural" opportunities? Planning and appropriate
training as well as acquisition of those with the right skills to manage the opportunity.
Strategic Intent - a reasoning taught in any strategic management course and defined as "a tangible corporate
goal or destiny that represents a stretch for the organization. It also implies a point of view about the competitive
position a company hopes to build over the coming decade."
Business Eco-systems
The essence of all the above suggests a "business eco-system." After all, without customers (the market) to "buy"
and without capabilities (companies' products, production, or services) to "sell", there is no transaction. Without
transactions there will be no business conducted. A business eco-system is a "system in which companies work
cooperatively and competitively to support new products, satisfy customers, and create the next round of innovation
in key market segments." An example is posed by the question..."who buys buggy whips today?" We should all be
happy that innovation is the driving force that brought us the automobile, the airplane and yes,... computers and the
internet!
End of excerpts from article in Business Week on Strategic Planning.
Innovation in Transportation and Distribution
Innovation must take place in transportation terminals and distribution centers. While some innovation has taken
place there remains a great deal more to do. For example, the maritime industry is an industry that has generally
been reluctant to change or accept change view their efforts to stay with the status quo. Some will reach beyond
this stagnant thinking. A service company, Federal Express for example, that has continuously improved its
delivering the service (delivery of the goods) in a dependable and timely manner. The maritime industry must
improve its abilities by demanding shore-side facilities efficiencies in expediting the goods (and the vessels). This
must be done to meet growing demands of time and dependability in the supply chain. Companies are spending
fortunes to reduce time to market by hours, not just days!!
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