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. I. II. Business Enterprise Focus Strategic Direction Marketing and Channel Linkages III. Financial IV. Organizational Structure V. Social Responsibility

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

Production Emphasis Manufacturing Mentality Low Cost Producer Large Scale Operation Outsource Resources Downside Price Risk Independent Decision-

Commodity Strategy Differentiated Strategy

End-User Focus Distribution/Marketing Mentality Value/Added Production Smaller Scale Operation Own Resources Relationship Risk Interdependent Decision

Open/Impersonal Markets Negotiated Markets

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.
1. 2. 3.

Marketing and Channel Linkages

Marketing Your Firm Merchandising and Selling Products/Services 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. 2. 3. Communicating Your Good stewardship Practices Being Involved in the Community Understanding the Needs and Concerns of Your Neighbors

Strategic Business Planning for Commercial Producers

Key Strategic Decisions

VII. Managerial Style/Lifestyle
1. 2. 3. 4. 5. 6. Time/Labor Contribution Living Expenditures Risk/Stress Level and Attitudes Learning New Skills Organization Culture 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
Delay Decision Trigger Growth Retrenchment

Concentration

Diversification Pause No Change Profit

Turn around

Captive Company

Exit

Vertical Horizontal Related Unrelated

Strategic Business Planning for Commercial Producers

Strategic Direction Options Growth

Concentration Vertical Integrate Network Cooperatives Value-Added Investments Horizontal Intensify Expand Replicate Network Diversification Related Diversify into Related Agricultural Production Enterprises Capture Synergies Unrelated Non-Ag Industries Ignore synergy For cash flows Or 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 Company Exit

Contraction Consolidation Outsourcing

Sole Supplier Preferred Provider Contract Grower

Sellout Divest Bankruptcy Liquidation

Strategic Business Planning for Commercial Producers

Which Units to Grow?

Business Unit Growth Matrix

Based on EFAS and IFAS 4 Quadrants

Normally Delay Strategy

Cash Cows Low EFAS, High IFAS Stars High EFAS, High IFAS Question Marks High EFAS, Low IFAS Dogs Low EFAS, Low IFAS
Retrenchment Strategy Growth or Delay Strategy Normally Growth Strategy

Strategic Business Planning for Commercial Producers

Business Unit Growth Matrix

High Star ?

EFAS
Cash Cow Low High Dog

IFAS

Low

Strategic Business Planning for Commercial Producers

Growth Options Matrix

How Do We Grow?
Based on Customers and Products 4 Quadrants

Market Penetration

Market Development

More of Same Product to Same Customers Horizontal Growth Same Product to New Customers Horizontal and/or Vertical Growth New Product to Same Customers Vertical or Horizontal Growth New Product to New Customers

Product Development Total Diversification

Strategic Business Planning for Commercial Producers

Growth Options Matrix

New Customer Focus Market Development Total Diversification

Market Penetration

Product 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 Weak Strong

Competency?

Strategic Business Planning for Commercial Producers

Source of Competitive Advantage

Outsourcing Matrix
Yes

(Key Activities)

Get Capability

Keep in-house

Possibly
(Emerging Activities)

Collaborate

Partner

No
(Basic Activities)

Exit / Buy

Consider Selling

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
Su Ac ppo tiv rt itie ing s

Human Resource Management Technological Development Procurement

Out bou nd Log istic s Mar & S keting ales

N GI AR M
Serv ice

Ope rati ons

Inb oun d Log istic s

Relationship with suppliers

Relationship with buyers

M AR GI N

Pr Ac ima tiv ry itie s

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