Strategic Business Planning for Commercial Producers

What Do You Need to Make Strategic

Choices?
Strategic Business Planning for Commercial Producers

Objectives

Present key decisions and their basic

options
Provide tools for selecting a strategy in
your business
Strategic Business Planning for Commercial Producers

Key Strategic Decisions

I. Business Enterprise Focus

II. Strategic Direction
III. Marketing and Channel Linkages
IV. Financial
V. Organizational Structure
VI. Social Responsibility
VII. Managerial Style/Lifestyle
Strategic Business Planning for Commercial Producers

Key Strategic Decisions

I. Business Enterprise Focus

1. Product
2. Product/process technology
 Strategic Business Planning for Commercial Producers
Alternative Strategic Focus
Strategies
Commodity Strategy
Production Emphasis
Manufacturing Mentality
Low Cost Producer
Large Scale Operation
Outsource Resources
Open/Impersonal Markets
Downside Price Risk
Independent Decision-Making
Differentiated Strategy
End-User Focus
Distribution/Marketing
Mentality
Value/Added Production
Smaller Scale Operation
Own Resources
Negotiated Markets
Relationship Risk
Interdependent Decision
Making
Strategic Business Planning for Commercial Producers

Key Strategic Decisions

II. Direction
1. Growth
2. Delay
3. Retrenchment
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
Strategic Business Planning for Commercial Producers

Key Strategic Decisions

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

Strategic Direction

Growth, Delay, or Retrenchment

Strategic Business Planning for Commercial Producers

Focus on Strategic Direction

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?
 Strategic Business Planning for Commercial Producers

Strategic Direction Options

Strategic Direction

Growth Delay Retrenchment

Decision
Trigger

Turn Captive
Concentration Diversification Exit
around Company
Pause No Change Profit

Vertical Horizontal Related Unrelated

 Strategic Business Planning for Commercial Producers

Strategic Direction Options

Growth

Concentration Diversification

Vertical Horizontal Related Unrelated

Integrate Intensify Diversify into Non-Ag

Related Industries
Network Expand Agricultural
Production Ignore synergy
Cooperatives Replicate Enterprises
For cash flows
Value-Added Network Capture Or
Investments Synergies Risk reduction
Strategic Business Planning for Commercial Producers

Strategic Direction Options

Delay

Decision
Trigger

Pause No Change Profit

 Strategic Business Planning for Commercial Producers

Strategic Direction Options

Retrenchment

Turn around Captive Exit

Company

Sellout
Contraction Sole Supplier Divest
Consolidation Preferred Provider Bankruptcy
Outsourcing Contract Grower Liquidation
Strategic Business Planning for Commercial Producers

Which Units to Grow?

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
Strategic Business Planning for Commercial Producers

Business Unit Growth Matrix

High
Star ?

EFAS
Cash Cow Dog

Low

High Low
IFAS
Strategic Business Planning for Commercial Producers

How Do We Grow?
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
 Strategic Business Planning for Commercial Producers

Growth Options Matrix

New Market Total
Development Diversification
Customer Focus

Market Product
Penetration Development

Old

Old Product/Service New

Strategic Business Planning for Commercial Producers

What Do We Give Up?

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
 Strategic Business Planning for Commercial Producers

Outsourcing Matrix
Yes
Get Capability Keep in-house
(Key Activities)

Possibly
(Emerging Collaborate Partner
Activities)

No
(Basic Exit / Buy Consider Selling
Activities)

Weak Strong

Capability and Cost (relative to others)

Adapted From Richard Insinga and Michael Werle, Linking Outsourcing and Strategy.
Strategic Business Planning for Commercial Producers

The Value Plate

Firm Infrastructure
Human Resource Management
Technological Development
Procurement

Relationship with suppliers Relationship with buyers

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.
Strategic Business Planning for Commercial Producers

Strategic Business Planning for

Commercial Producers