STRATEGIC PLANNING FOR SMALL BUSINESS

Topics: Strategic planning, Management, Strategic management Pages: 15 (532 words) Published: April 14, 2015
STRATEGIC PLANNING
FOR SMALL BUSINESS
Chapter 6

What is Strategic
Planning?
• The process of determining
the primary objectives of the
entrepreneurship and then
adopting courses of action
and allocating resources to
achieve those objectives.
• It provides the entrepreneur
with a systematic approach to
the achievement of the firm’s
objectives.

Three Distinct Steps
of Strategic Planning:
I. Determination of
Primary Objectives
II. Adoption of Course of
Action
III. Allocation of
Resources

I. Determination of
Objectives
The Mission Statement – the basic
description of the fundamental nature,
rationale, & direction of the firm.
3 Concerns of Mission Statement
1.How the entrepreneur intends to use
his resources
2. How the entrepreneur expects to
relate to the ever-changing
environment
3. The kinds of values the
entrepreneur intends to offer to his
customers

Strategic
Objectives
• This term refers to
specific performance
targets that the
entrepreneurship hopes to
accomplish.
• The objectives define, in
specific terms, “How the
firm’s mission will be
realized?”

II. Adoption of
Courses of Actions
Course of Action - A strategy developed
by the entrepreneur after the primary or
strategic objectives are established.
 
Strategy – a carefully designed plan for
achieving the firm’s objectives.
• Indicates how the entrepreneur will
attempt to accomplish the goals with
the resources available.

2 Tools in Developing
Realistic Strategies:
1. SWOT Analysis – an organized method
of assessing a firm’s strengths and
weaknesses and the opportunities and
threats in the external environment
that confront or will confront the
firm.
Purpose of SWOT Analysis: To match the
firm’s strengths and weaknesses with
external opportunities and threats to
determine what strategy to adopt.

2 Tools in Developing
Realistic Strategies:
2. Forecasts of future sales
performance
• Forecasts – supplementary tools
for SWOT Analysis.
- An estimate/ prediction of the
future sales or income of the
firm.
- It may be short-term (1 yr. or
less), medium-term (1-5 yrs.),
long-term (over 5 yrs.)

III.Allocation of Resources
Implementing Strategic Plans
Activities required to put
strategies into action:
1. Identifying the specific
methods to be used
2. Deploying the resources needed
to implement the intended
plans

Fundamental Strategies
for Small Business
Basic strategies that are
necessary for the survival of the
business:
1. The Flexibility Strategy
2. The Strategy of Effectiveness
as a Higher Priority
3. The Strategy of Starting Simple

Strategy Concerns of
Small Business
In determining what strategy
to adapt, the entrepreneur is
confronted with two general
situations:
• Is he organizing a new
business?
• Is he currently running an
old business?

New Business
– one that will be operated for the
first time by the small business
operator.
His options consists of the
following:
• Acquiring an existing business
• Organizing a new business
• Buying a franchise

Old Business
His options consists of the
following:
 
• Compete with small business
• Compete with large business

Strategies of a Growing
Concern
Any or all of the following
strategies are applicable to
small business:
1. Segment Markets
2. Efficient use of research
and development
3. Think Small

Why Small Business Operators
Ignore Strategic Planning?
The reasons could be any of the
following:
1. Lack of expertise
2. Inability to get started
3. Uncontrollable, often intangible
variables
4. Resource poverty
5. Focus on daily operations
6. Failure to realize the importance
of strategic planning

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