Small Company Strategic Planning and Competitive Advantage
Sample Essays

Small Company Strategic Planning and Competitive Advantage

Small Company Strategic Planning and Competitive Advantage

  1. Why is strategic planning important to a small company? 

With small business increasingly becoming integral part of the national and global economies, it is important that effective management processes are put in place. Strategic planning is one of the ways in which small business can unlock their potential and compete favorably in the national and global economies. Strategic planning refers to a systematic process of creating a mission and articulating the business vision and subsequently outlining the specific steps that ought to be taken to ensure that they are attained (Alcorn & Alcorn 1). The advantages of having an effective strategic plan range from increased capacity to market recognition and competitive advantage.

Small business should design flexible and mindful. However, one of strategic plans aspect that makes the important for business is their ability to prioritize (Alcorn & Alcorn 2). A strategic plan will work on creating a balance between the production and revenue initiatives. This ensures that the company only focuses on those meaningful activities without drifting as a result of pressure or complacency.

Decision making in the presence of a strategic plan is much improved. The decisions a company makes will be based on the stipulations of their mission, vision and strategy. This helps increase the quality and accuracy of the decision while saving on time (Gegax and Phil, 47). A small company is thus able to take the right steps while hiring and rewarding, investing, and establishing systems.

  1. What is a competitive advantage? Why is it important for a small business to establish one? 

Competitive advantage refers to the edge a company has over its competitors. Such advantage gives them the ability to attract and retain more customers while recording better sales margin than the competition. Competitive advantage might take the form of low cost production (Comparative advantage) or differentiation of goods and services (differential advantage). While comparative advantage ensures high sales volume due to low pricing, differential advantage ensures high revenue through high pricing of quality products.

The environment that small business operate in is overcrowded this necessitates the need to offer something other than what the competitors offer. In such highly competitive environments, customer retention and maintaining stable revenue stream is difficult. This calls for a survey of the preferences of the market and choosing the competitive strategy to embrace (Smith and William, 7).

  1. What are the steps in the strategic management process? 

The steps in the management process include;

Step 1: Identify the present Mission, Vision and Strategies of an organization

This step evaluates the business’ purpose for being in operation as outlined in the mission, vision and strategies

Step 2: Conduct an internal and external analysis of the organization

The internal analysis of key resources and competencies helps to identify strengths and weaknesses while the external audit on competitors, labor supply and regulations help identify threats and opportunities.

Step 3: Create new business mission and vision

The internal and external analysis will help the company decide its new aims, objectives and priorities.

Step 4: Formulate strategies to meet the vision and mission

The mission and vision formulated in step three are translated into strategies. These strategies outline how the business intends to meet each goal and objective.

Step 5: Implement Strategies

The strategies are enforced through actions. Implementing the strategy include creation of new products, addition of value, hiring new employees, and venturing into new markets.

Step 6: Evaluate performance

Given the fact that strategic management is a continuous process, there is need for monitoring the progress being made. Evaluation will help ascertain the need for change or improvement.

References

Alcorn, Mark D. J.D., and Alcorn, Shelly. Effective Strategic Planning For Small Companies. 2010. Retrieved http://www.alcornassociates.com/Docs/MDAStratSmBus.pdf

Gegax, Tom, and Phil Bolsta. The big book of small business: you don’t have to run your business by the seat of your pants. New York: Collins, 2007. Print.

Smith, Jaynie L., and William G. Flanagan. Creating competitive advantage give customers a reason to choose you over your competitors. Unabridged. ed. New York: Crown Business, 2013. Print.

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