Every company or institution basically follows a given strategy, even if not geared to specific objectives or formulated for action. A strategy may be anything from “going on as is”, because the company presently is assumed to do well enough, or to “achieve success through building organic growth” which can hardly motivate profound change, or “we will expand internationally” without further explanation of what, how or when.
Some strategies we have seen are in somewhat clearer terms, but sometimes as a kind of slogan: “We will strengthen efforts to become a leading company in the worldwide market for xxx-type machines” – well, that’s more like an objective than a statement of how to get there in broad although specific terms.
A good strategy must be based on a clear formulation of short/medium to longer term objectives or goals, set in business terms. Those may be be financial – ROI, ROE, EBIT etc – or market oriented – market share by key market, segment or country – or other types that may be anything from ethical to political, depending upon the role of the company or institution. Objectives have to be based on a factual evaluation of what appears possible in the market situation and desirableto achieve in view of top management or Board thinking, the financial and human resources available, and the amount of acceptable risk.
Like objectives, the main corporate or institutional strategy must be largely fact-based and not contain slogans or hopes, if it is to constitute a practical and effective means for the organisation to work by.
A strategy is not a business plan and should be expressed in much broader terms while still being clear and specific as to chosen directions and main routes to follow. If the strategy involves very major changes, it should also indicate main moves needed to carry through the new strategy.
A business plan is not a strategy, but makes it clear exactly how the strategy can or will be implemented step by step in the short to medium term.
A budget is of course mainly an annual overview of incomes and costs assumed to be involved in carrying out the business plan. Some companies concentrate above all on its budgeting without fact-based objectives to reach, clear strategies to follow and a business plan that properly or fully reflects given objectives and agreed strategies.
In close cooperation with selected client people, Business Strategy BSAG assists managements strategically, analytically and creatively in working out fact-based and realistic objective-setting, strategic roadmaps and goal-focused business plans. In line with this, we regularly work out a best, worst and intermediate case to show a range of possible results of different strategic alternatives, investment costs and likely risks involved in each case.
We don’t tell our clients what to do – they normally know rather well – but help them in evaluating, formulating and using the tools described. We also help in turning strategies effectively turn into practice through business plans, implementation assistance and client teamwork.