Transcript Business Development Workshop Business Concept Sanity Check

Strategic Services
Growth & Strategy Workshop
Presented at YOUR COMPANY
By Jim Pettit 703-447-7755
Fax 703-689-0010
A Systems Engineering Approach
Copyright JPettit 1997
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Strategic Services
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Helps grow the business
Provides Engineers & Staff with a
business outlook
Provides insight to new business owners
Helps startup Companies scope out the
business
Helps Companies in transition refocus
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Strategic Services
Clarify Business Issues
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Create growth strategies
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Build an Action plan
Overcome competition and increase market share
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Strategic Services
Our Priorities for the Workshop
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Getting the Strategy for growth right
Understanding the Critical Business
Issues
– Understanding what’s needed for the strategy to work
– Being excellent at those things that the strategy depends
on
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Focus (see slides Focus 1&2)
– Staying in touch with daily details, like closing sales
and operational efficiency
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Strategic Services
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Better understand the business
Understand Emerging Threats
Prepare for future actions
Meet emergencies
Determine future needs (CBI)
Define where we want to take the
business
Craft business strategy
Create an Action Plan (Maneuvers)
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Strategic Services
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Microsoft bundling of
software programs
The point is we want
to start with a strategy
that has profit
potential
This example brings
the “one stop shop”
strategy to mind
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Companies with a
single product like a
word processor or
spreadsheet can’t
complete
Inter operability
achieved by MS
Price breaks given by
MS
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Strategic Services
Do something in an extraordinary way
 Focus on the task of the business
 Use technology to improve operations
 Impact customers in a big way
 Provide a compelling product or service
 Create value for the customer
Guiding Values
For hitting home runs
From Intel
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Strategic Services
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Does the customer have money?
Do they have a compelling need to buy
from us?
Can we deliver a whole solution?
Is there serious competition preventing
our penetration and success?
Can we grow the business from here?
Is image & positioning congruent
From Text
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Strategic Services
Focus-1
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The Strategy (Our plan to grow in
the market-the HOW)
Reducing complexity and confusion
to clarity (creating clarity for
business decisions)
Taking action to get results
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Strategic Services
Give us our Daily
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Focus-2
Finding a market we can be great in
Marketing: Identifying and Creating Demand
Selling: Reaching Customers and Closing
Producing: Satisfying the Demand
Operating: At a Profit
Using Speed: For competitiveness and profit
Building an organization that understands
and works to optimize the above
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Strategic Services
Business Overview
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Strategic Services
Business Simplified
Target Hitting Ability
Target/Customers
Sales
What the Customer Wants
Do we understand what the customer
needs?
Does the Customer have money?
Can we create a compelling offer?
Can we overcome competition?
Can we grow from here?
The Offer Machine
Offers
(Your Business)
Creating the Offer
Offers
Pedestrian
?
Worldclass
Faster
Cheaper
Better (differential advantage)
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We are focused on creating the best
offer meeting the customers needs with
the highest returns
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Strategic Services
Offers Means
 What
do you have to sell?
 How are you going to sell it?
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Strategic Services
Offer Simplified / Our differential advantage
Faster
Cheaper
Better=Your differential advantage
Where we want to be with our offers
Compelling Need
Strong Demand
Impact Customers in big way
Exclusivity
First to Market (speed issue, but not too soon)
Product Analysis
Features
Benefits
Our Task
Value to Customer
Create Offers Superior to the Competition
Better meet Customer Needs
Better Understand Customer Needs
Provide more value for Customers
Create strong demand for our products
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Strategic Services
Everything we do is to
What makes an offer successful in your
business?
We will understand how your offer is positioned
in the market
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Strategic Services
Improving the Offer
To be worked
We have to make our offer (what we have to sell) better
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Strategic Services
Mapping the business
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Strategic Services
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I need a visual representation of the
business
– Provides a framework to collect, understand
and visualize business data
– Helps to understand the big picture and growth
path
– Documents the thinking and approaches
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Strategic Services
Copyright JPettit 1997
Overcome competition and increase market share
Clarify Business Issues
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Create growth strategies
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Build an Action plan
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Strategic Services
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We will analyze
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The business environment
The Competitive Advantages
Strategies for growth
Critical Business Issues supporting
Strategies
– Build an Action plan for Growth
– And more
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Review Case Studies (examples + yours)
Go through the process step by step
Map out your business
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Strategic Services
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The Method of synthesizing a strategy
and action plan is illustrated by the
examples of a
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Hotel
Law Firm
Small manufacturing
D-Day Military example
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Strategic Services
Examples of Business Mapping Follows
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Strategic Services
Business Goals
Vision
Financial Results
Provide superior accommodations hospitality and
entertainment for guest looking for a winter getaway
ROS
ROI
ROA
What we want to be
Non-Financial
Financial
Future Environment
Current Situation
Where we are
• Sales stable
• Infrastructure Good
• Very Competitive
• New Competitors entering
• Excellent Location
Environment
Lots of local
capacity
Price wars
Profit dependent on
currency rate
Drivers
Influences the Business
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Strategic Components
Keep it Full
Weather
Price
Econ Confidence
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Excellent Staff
Excellent Location
Distinctive Skills
Warm tropical Location
Convenient Airport
Good Marketing Ntwk
Action Plan
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Provide Exceptional
Entertainment at Hotel
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Key Factor for Success in
this busines s
• Location
• Location
• Location
Maneuvers
How we deal with achieving the
vision provide a better offer and
overcome competition
Key Factors for Success
Resources Supporting the Strategy
• 500k Building renovations
• 100k Entertainment budget
• 100k Audio Visual purchases
What we have to build
the strategy
Strategy Created
Bring in Big Band next season
Bring in Good Singers
Install Internet this fall
Strengthen Bus Ctr
New Food Menu in 4 Languages
Bands
Singers
Dancing
Dance Lessons
Activities
Critical Business Issues
Things that must happen for the
Strategy to work.
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Improve Entertainment Quality
Develop Band&Singer sources
Advertise get the message out
Improve Restaurant Operations
Improve Shops (extend hours)
Provide multi Language opts
Improve safety fire earthquake
Responsible Individual
Responsible Individual
Responsible Individual
Responsible Individual
Responsible Individual
Responsible Individual
Responsible Individual
Resources required to make it happen
Skills to make it happen
Problems to work
JP /Reston
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Strategic Services
Business Goals
Vision
Non-Financial
Financial
What we want to be
The Upscale patent house
More associates
Higher margin work
Current Situation
Where we are Now
Good shape now
Poor Marketing Plan
No Marketing Plan
Drivers
Moving toward
Commodization
Technology more
complex
Increased
Difficulty
What we have to
build the strategy
Low Cost Structure
Reputation
Good International Cust
Great Location
Profitable Business
Key Factor for Success
in this business
Commodization
pressure building
Consolidation in Ind
Reputation
Location
Resources Supporting the strategy
A tax must be placed on revenue to create a Marketing
budget
Funds must be found to support the new hires
Threats
Commodization
Gravitation to larger firms
Copyright JPettit 1997
ROS= 20%
ROI
ROA
Future Environment
Strategic ComponentsStrategy Created
Environment
Key Factors for Success
Influences the Business
Financial Results
How to achieve the vision,
overcome competitors and
increase market share
Vigorously Pursue Existing
Customers with service and
New Offers
More International travel and
customer contact
Increase Marketing
Raise Level of awareness
Maneuvers
Action Plan
Visit Japanese every March
Visit Germans every Oct
Visit other TBD
Web page by Jan
Hire new Lawyers Sept.
Open Office Silicon Valley Jan
Critical Business Issues
Things that must happen for the Strategy to work.
Develop new strategic components
Travel to meet International customers must be routinely done
Marketing Budget must be established and funded
More Literature and advertising must be created and sent
Younger Law associates must be trained and do simpler work
Funds must be found to carry young lowers while in training
Resources required to make it happen
Skills to Make it Happen
Problems to Overcome
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Strategic Services
Vision
Business Goals
Non-Financial
Financial
Future Environment
Current Situation
Environment
Where we are Now
Military
Changing fuel
Great for Pat.
Gas going away
Finished big order
New win on bid
Drivers
Strategic Components
What we have to
build the strategy
Patent Protection
Reputation
Special Knowledge
ROS
ROI
ROA
Strategy Created
How to achieve the vision
while overcoming the
competition
Market Product w/
Patent Protection
Sub out everything
Market to Military
Maneuvers
Action Plan
Build tooling
Contract with
Suppliers
Market Systems
Key Factors for Success
Influences the Business
Gasoline being
Replaced w/DF
Multi fuel in
Key Factor for Success
in this business
Multi fuel Cap
Clean Combustion
Resources Supporting the strategy
400K for tooling budget
Threats
Large Manufacturers w/big Marketing
Tooling not available can’t deliver
Organizational difficulties w/large volume
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Financial Results
What we want to be
Producer of the best and only Multi fuel
operated equipment
Critical Business Issues
Things that must happen for the Strategy to work.
Develop new strategic components
Develop source of supply
Tooling Acquisition
Price must be reduced for commercial market
Design must be product ionized and work out of
box
Clean up design defects
Must win military contracts
Resources required to make it happen
Skills to Make it Happen
Problems to Overcome
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Strategic Services
Vision
Business Goals
What we want to be
Non-Financial
Financial
Current Situation
Drivers
Influences the Business
Materials declining
Two fronts
Future Environment
Strategic Components
Environment
Attrition
working against
Forces
What we have to build the
strategy
Excellent Training
Excellent troops
Some fortified sites
Strategy Created
How to achieve the vision while
dealing will all constraints and
environment
Hold or stop at beach
Immediate C attack
Reinforce
Maneuvers
Action Plan w/Schedule
Fortify beaches 5/44
Train daily 5/44
Move more troops in
Flood nearby area 6/44
Build Para trp traps 7/44
Key Factors for Success
Key Factor for Success in
this business
Must blunt invasion
Immediate C Attack
Offset no Air Force
Resources Supporting the strategy
Site fortification materials cement bld mtls
Rebuild Air Force 3000 planes per month
Rebuild pilots 4000 per month
Threats
No Air force 20/1 disadvantage
No Navy
Don’t know where the landing will be
Single defensive line thin
Under supply, mixed weapons base
Copyright JPettit 1997
ROS
ROI
ROA
Repel Invasion force
Where we are Now
Expect Early
Summer Invasion
Forts incomplete
Financial Results
Critical Business Issues
Things that must happen for the
Strategy to work.
Develop new s trategic components
Must stop at beaches
Coastal guns must take out ships, Deal w/ 20/1 AF adv
Must be able to resupply
Must have Intelligence of where landing will come
Must complete fortifications
Must mine waters
Resources required to make it happen
Skills to Make it Happen
Problems to Overcome
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Strategic Services
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Fleshing out the Business Map
Strategic Planning work sheet or road
map
Working the Road Map
Building the Strategy and Action Plan
Understanding the Financial Structure
– Examples
– Direct, Indirect, Costs
– Ratios etc.
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Strategic Services
Worksheet
Vision
Business Goals
What we want to be
Non-Financial
Financial
Future Environment
Current Situation
Environment
Where we are Now
Strategic Components
What we have to build the
strategy
Drivers
Financial Results
ROS
ROI
ROA
Strategy Created
How to achieve the vis ion while
dealing will all contrants and
environment
Maneuvers
Action Plan w/Schedule
Key Factors for Success
Influences the Business
Key Factor for Success in
this busines s
Critical Business Issues
Things that mus t happen for the
Strategy to work.
Develope new strategic components
Resources Supporting the strategy
Resources required to make it happen
Threats
Skills to Make it Happen
Problems to Overcome
Copyright
JPettit
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From Strategic
Planning
Paper by Jim Pettit
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Strategic Services
Worksheets
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Competitive Advantage & Strategic
Components
Industry Drivers and Trends
Critical Business Issues
Key Factors for Success (why the other guy
is successful)
Maneuvers and Action Plan
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Strategic Services
Positioning (mind share etc.)
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How is you company and products
positioned?
How is the company viewed?
– Upscale, Middle, low cost bare bones
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This issue is introduced because a degree of
congruence between the product offering
and image is necessary. (will explain)
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Strategic Services
Industry Drivers and Trends
List Your Industry Drivers and Trends
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Strategic Services
Key Factors for Success
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Location
Location
Location
Industry Key Factors
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Strategic Services
What does the customer Want
The Target
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Understanding the
customers wants and
needs
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Strategic Services
Competitive Advantage
Work Sheet
List Your Business Competitive Advantage
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Strategic Services
Strategic Components
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What you have to
build the strategy
faster, cheaper, better
distribution, brand etc.
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Strategic Services
Competitive Comparison
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You
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Them
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Strategic Services
The Strategy
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Build the Strategy
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Strategic Services
Positioning (mind share etc.)
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How are we positioned?
Customers perceptions of the firm?
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Strategic Services
Critical Business Issues Follow
We will develop your critical business issues
These are the things you must be successful at.
Things that your strategy depends on.
Like developing a software capability, finding a sales
Representative, making an acquisition, building
Production capability etc.
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Strategic Services
Critical Business Issues
a very important issue
Things that must happen for the Strategy to Work
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Strategic Services
Action Plan + Schedule
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Action
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When
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Strategic Services
After Action Review
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What Happened?
Why did it happen?
How do we increase strength and
decrease weakness?
How will we do it “the next time”?
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Strategic Services
Financial Structure
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Strategic Services
Financial Structure
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Identify all Costs
Segregate costs into Direct and Indirect
Look at Ratios
Look at ways to reduce expenses
Review Tables on Financial Analysis
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Strategic Services
Return on Investment
Return on Assets
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ROA= Return/Sales x Sales/Assets
ROA= 5% X 10
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Strategic Services
Financial Analysis
A
Year
1
Row
1.0
1.1
1.2
1.3
Strength (millions)
2.0
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
Profitability
3.0
3.1
3.2
3.3
3.4
Investment
4.0
4.1
4.2
4.3
4.4
4.5
4.6
4.7
Efficiency
Revenue
Revenue Growth %
Cash Flow
Cost of P&S
Gross Profit
Gross Margin %
PBT
Operating margin %
Net Income
Return on Invest (ROI)
Return on Sales (ROS)
Sales per Employee
Employees
Working Capital
Plant and Equipment
Investment Base
Total Assets Turnover
Working Capital Turnover
Return on Assets (ROA)
Profit Growth %
PBT Growth %
Sales to Cost Ratio %
Days Receivable
Copyright JPettit 1997
B
Year
2
$
10.00 $
3%
$
$
6.40
3.60
36%
1.67
17%
1.00
25%
10%
0.125
$
$
$
$
$
$
$
$
80
$
4.00
C
Year
3
8.00 $
-20%
6.10
1.90
24%
0.17
2%
0.10
2%
1%
0.114
$
$
$
$
$
70
$
4.12
D
Year
4
10.00 $
25%
11.00 $
10%
12.00
9%
6.00
4.00
40%
1.83
18%
1.10
27%
11%
0.123
7.00
4.00
36%
2.50
23%
1.50
37%
14%
0.134
7.80
4.20
35%
2.67
22%
1.60
38%
13%
0.133
$
$
$
$
$
81
$
E
Year
5
4.10
$
$
$
$
$
82
$
4.10
Revenue less Cost of P&S
Gross Profit/Revenue
PBT/Revenue
Net Income/Investment base
Net Income/Revenue
Revenue/Number Employees
90
$
4.20 Investment at work to mk income
3
Sales/ Total Assets
9
60
Comment
XYZ Corp
Income/ Total Assets
-90%
1000%
36%
100
50
40
7%
45 Days to Collect Receivables
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Strategic Services
Row
1.0
1.1
1.2
1.3
2.0
2.1
2.2
2.3
2.4
2.5
2.6
A
Year
1
B
Year
2
C
Year
3
D
Year
4
E
Year
5
Comment
Strength
Revenue
Revenue
Cash Flow
Profitability
Cost of P&S
Grjoss Profit
Gross Margin
PBT
Operationg margin
Net Income
Financial Analysis
3.0 Investment
3.1 Employees
3.2 Working Capital
4.0
4.1
4.2
4.3
4.4
4.5
4.6
4.7
Efficiency
Rev. per Capital
Working Capital Turnover
PBT per Capital
Gross Profit Growth
PBT Growth
Cash Flow per $ Sales
Sales to Cost Ratio
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Strategic Services
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Rate your business using the attached report
card
We will discuss in detail
What needs to be fixed?
What are we going to fix?
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Strategic Services
Business Report Card
Excel
click Ratings
to work
Sectionobject
1 Competitive
Item
1.00
Competitive Issues
Importance
Factor
Leadership qualities (Management)
1 to 4
Your Major
Competitor
You
Score
Score
Comments
1 to 4
Decisiveness
Prone to Bold Moves
Direct Experience in Industry
Implementation abilities
Degree of Independence
Strategic Thinking
Ability to craft Co Identity & Co
To meet market expectations
2.00
Marketing Qualities (Company)
Ability to Identify new Opportunities
Ability to completely scope out opportunities
Ability to craft company Image
Ability to grow business
3.00
Sales (Company)
Ability to create first class Proposals
Quickly develops relationships with Customers
Degree to which sale force is consulted about customers and products
Ability to grow sales
4.00
Financial Systems (Company)
Controls
Degree of Automation
Accreditation
Financial system speed
5.00
Quality issues (Company)
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Strategic Services
Execution
The question is, can you execute?
That’s what differentiates One company from another.
Larry Bossidy CEO AlliedSignal
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Strategic Services
Execution:
Give us Daily Success at
Marketing: Identifying and Creating Demand
Selling: Reaching Customers and Closing
Producing: Satisfying the Demand
Operating: At a Profit
Using Speed: For competitiveness and profit
Building an organization that understands
and works to optimize the above
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Strategic Services
Workshop Issues
We map out the Business Architecture
Can this business, product, or service compete?
Are we focusing on the right things?
Do we have a reasonable competitive advantage?
Are we playing in a strong market?
Is there a compelling need for the products & services?
What are the critical business issues?
Do we have a workable plan to move ahead?
Are we on plan?
Do we have the resources to execute?
What can we do better?
What are the next steps?
Is our story sound enough to attract money?
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