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Strategic Business Planning for Commercial Producers What Do You Need to Make Strategic Choices?

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Presentation on theme: "Strategic Business Planning for Commercial Producers What Do You Need to Make Strategic Choices?"— Presentation transcript:

1 Strategic Business Planning for Commercial Producers What Do You Need to Make Strategic Choices?

2 Strategic Business Planning for Commercial Producers Objectives Present key decisions and their basic options Provide tools for selecting a strategy in your business

3 Strategic Business Planning for Commercial Producers Key Strategic Decisions  Business Enterprise Focus  Strategic Direction  Marketing and Channel Linkages  Financial  Organizational Structure  Social Responsibility  Managerial Style/Lifestyle

4 Strategic Business Planning for Commercial Producers Key Strategic Decisions  Business Enterprise Focus  Product  Product/process technology

5 Strategic Business Planning for Commercial Producers Alternative Strategic Focus Strategies Commodity StrategyDifferentiated Strategy Production EmphasisEnd-User Focus Manufacturing MentalityDistribution/Marketing Mentality Low Cost ProducerValue/Added Production Large Scale OperationSmaller Scale Operation Outsource ResourcesOwn Resources Open/Impersonal MarketsNegotiated Markets Downside Price RiskRelationship Risk Independent Decision-MakingInterdependent Decision Making

6 Strategic Business Planning for Commercial Producers  Direction  Growth  Delay  Retrenchment Key Strategic Decisions

7 Strategic Business Planning for Commercial Producers Key Strategic Decisions III. Marketing and Channel Linkages 1.Marketing Your Firm 2.Merchandising and Selling Products/Services 3.Sourcing and Purchasing Resources

8 Strategic Business Planning for Commercial Producers Key Strategic Decisions IV. Financial 1.Business/Legal Choices 2.Financing/Leasing Options 3.Equity Sources

9 Strategic Business Planning for Commercial Producers Key Strategic Decisions V. Organizational Structure –Determining the Chain of Command –Assigning Responsibility –Giving Authority to Those with Responsibility

10 Strategic Business Planning for Commercial Producers Key Strategic Decisions VI.Social Responsibility 1.Communicating Your Good stewardship Practices 2.Being Involved in the Community 3.Understanding the Needs and Concerns of Your Neighbors

11 Strategic Business Planning for Commercial Producers Key Strategic Decisions VII. Managerial Style/Lifestyle 1.Time/Labor Contribution 2.Living Expenditures 3.Risk/Stress Level and Attitudes 4.Learning New Skills 5.Organization Culture 6.Leadership

12 Strategic Business Planning for Commercial Producers Strategic Direction Growth, Delay, or Retrenchment

13 Strategic Business Planning for Commercial Producers Common Direction Questions –Should we grow? –Which business units should we grow? –How do we grow the business unit? –What activities, if any, should we give up to grow? Focus on Strategic Direction

14 Strategic Business Planning for Commercial Producers Strategic Direction Options Strategic Direction Delay Pause Decision Trigger No ChangeProfit Growth Concentration Diversification VerticalHorizontalRelatedUnrelated Retrenchment Turn around Exit Captive Company

15 Strategic Business Planning for Commercial Producers Strategic Direction Options Growth ConcentrationDiversification VerticalHorizontalRelatedUnrelated Integrate Network Cooperatives Value-Added Investments Intensify Expand Replicate Network Diversify into Related Agricultural Production Enterprises Capture Synergies Non-Ag Industries Ignore synergy For cash flows Or Risk reduction

16 Strategic Business Planning for Commercial Producers Strategic Direction Options Delay Pause Decision Trigger No ChangeProfit

17 Strategic Business Planning for Commercial Producers Strategic Direction Options Contraction Consolidation Outsourcing Sole Supplier Preferred Provider Contract Grower Sellout Divest Bankruptcy Liquidation Retrenchment Turn aroundExit Captive Company

18 Strategic Business Planning for Commercial Producers Business Unit Growth Matrix –Based on EFAS and IFAS –4 Quadrants Cash Cows – Low EFAS, High IFAS –Normally Delay Strategy Stars – High EFAS, High IFAS –Normally Growth Strategy Question Marks – High EFAS, Low IFAS –Growth or Delay Strategy Dogs – Low EFAS, Low IFAS –Retrenchment Strategy Which Units to Grow?

19 Strategic Business Planning for Commercial Producers Business Unit Growth Matrix IFAS High Low EFAS Star? Cash CowDog

20 Strategic Business Planning for Commercial Producers Growth Options Matrix –Based on Customers and Products –4 Quadrants Market Penetration –More of Same Product to Same Customers –Horizontal Growth Market Development –Same Product to New Customers –Horizontal and/or Vertical Growth Product Development –New Product to Same Customers –Vertical or Horizontal Growth Total Diversification –New Product to New Customers –Related or Unrelated Diversification How Do We Grow?

21 Strategic Business Planning for Commercial Producers Growth Options Matrix Old New Old New Market Penetration Product Development Market Development Total Diversification Product/Service Customer Focus

22 Strategic Business Planning for Commercial Producers Outsourcing Matrix –Based on Core Competencies and Competitive Advantage –Source of Competitive Advantage? No = a Basic Activity Possibly = an Emerging Activity Absolutely = a Key Activity –Competency? Weak Strong What Do We Give Up?

23 Strategic Business Planning for Commercial Producers Outsourcing Matrix Adapted From Richard Insinga and Michael Werle, “Linking Outsourcing and Strategy.” Source of Competitive Advantage Capability and Cost (relative to others) Yes (Key Activities) Possibly (Emerging Activities) No (Basic Activities) Get Capability Collaborate Exit / Buy Keep in-house Partner Consider Selling WeakStrong

24 Strategic Business Planning for Commercial Producers Firm Infrastructure Human Resource Management Technological Development Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Supporting Activities Primary Activities Relationship with suppliers Relationship with buyers The Value Plate

25 Strategic Business Planning for Commercial Producers Summary Doing things right versus doing the right things. Choosing what to do and what not to do. Answering the what, how, who, why, and when of strategy.

26 Strategic Business Planning for Commercial Producers


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