Business Strategy For Facilitative Leaders

Business Strategy

Did you know that business strategy is the art of deception? The study and design of your business strategy will have far reaching effects on your business. Many business leaders overlook the importance of understanding business strategy. As a result, many businesses fail or operate at sub par levels. There are many areas of business strategy to study, but the key components are (1) gaining a competitive advantage, (2) being an effective leader, and (3) winning with ease. These are all essential principles found in the book by Sun Tzu, The Art of War.

Gaining a Competitive Advantage

Competitive advantage can be won through avoiding commodity business models, knowing when to compete, gaining higher ground first, and by being original.

Avoiding the Commodity Business

Jack Welch, former CEO of General Electric, once said, “We are all just one stroke away from commodity hell”. The commodity is something that any business should stay away from. A commodity is a good that a business is powerless to change the price. For example, farmers are price takers and can only sell their goods for the price the world is willing to put on them. No matter how well the farmers does in raising up goods, the price will be what the market gives. There are many service businesses that have very little ability to change raise prices. If they do, they will not get any business. The bad thing about a commodity business is that the only way to sell is on price and that makes the profits go way down for everyone. The only way to get out of the price war is to gain higher ground.

To avoid commodity hell, the business must find an advantage. Some of the ways to get out of commodity hell are through branding, developing superior technology, and having top notch employees. Some companies develop a superior system that is efficient and that can manage a vast network well. There is a lot that can be said about each of these items.

Know When to Compete

In trying to gain the higher ground, there are a some good things to know. You should only compete when you know that you can win. You should never compete on a level playing field unless forced to do so. And, you should never ever compete in a battle that you are at a disadvantage.

Get Competitive Advantage First

In other words, take the higher ground before you compete. In that way, you will have a good chance to win. In business, battles are won before the competition ever begins. The best companies develop technology or intellectual capital first and then choose to compete when they think they can win.

Be Original

It is unlikely that any firm can gain the competitive advantage by trying to copy another. The reason is that the competitor will always be one step ahead of you and a smart competitor will even mislead you purposefully. Any business that wants a real market advantage will most likely need to develop their own ideas, keep them secret, and follow through.

Being an Effective Leader

A great leader must be strict, reward bravery, and avoid personal character downfalls.

Strictness as a Leader
Discipline must be swiftly carried out against the disobedient. There must be an effective system of rewards and punishments in place. The effective leader will be able to persuade others to the importance of the mission and commit them to work hard for the goal. Any leader that can’t manage their people must be removed.

Leader Character Downfalls

Some of the traits that can cause a leader harm are cowardice, recklessness, worry, hasty temper, and honor sensitivities. According to Sun Tzu, these are the five sins of a leader that lead you to get captured, bring destruction, trouble, shame, and poor decisions.

Rewarding Bravery

A great leader should reward people that are brave. People that step up and get things done that are risky or not popular should be rewarded for their efforts. The act of rewarding bravery has a great deal with keeping a company in competitive advantage. When employees are willing to take risks and give it their all, the intellectual contributions will give the company great advantage.

Winning With Ease

One of the greatest things that Sun Tzu said was, “What the ancients called a clever fighter is one who not only wins, but excels in winning with ease”. The greatest leaders know when to fight and when not to fight. They know how to compete in areas that are not well defended. They know how to use their people to win. When leaders win with ease, they are rarely given credit because it looks so easy. What many people don’t realize is that the battle was won before the fight began due to careful planning and strategy.

Final Thoughts

Business strategy is complicated. The businesses that do the best often the best at deceiving their opponents, balking their competitors plans, or, even better, have the best employees and constantly break new and higher ground before anyone else gets there.

Personal Qualities Required To Be An Entrepreneur And Start Your Own Business

A lack of skill, ability and experience in certain business areas need not be a barrier to success and starting your own business. The personal qualities exerted by a small business owner overcoming deficiencies over and over again are vital and present in many entrepreneurs much more so that specific technical knowledge.

Not everyone is a master of all business attributes in fact very few are. Certainly being a master of all is a fantastic position but unrealistic while certain personal qualities are essential to fight the inevitable battles to come. Business battles the successful entrepreneur wins.

Businesses that have grown and become medium sized and bigger are not reliant on the business owner entirely. Employees are engaged with specialist skills and abilities to develop and grow the business. A sole trader just starting out has to settle for a comfortable living or have the ability to grow the business to the point where more specialist abilities can be added to the business.

Most small business owners who start a new business do so in an area where that small business owner has some knowledge, experience and skill. It is a natural progression having acquired the business knowledge and experience to use those abilities to build the business under self employment rules rather than earn profits for an employer.

The personal qualities a small business owner possesses are more likely to determine the level of success. Abilities such as hard work, determination, persistence, intuition, tolerance and aggression can be the bedrock of success. But the road to success is not all slam wham bang for the entrepreneur.

Small business owners invariably work longer and harder than employees. An employee works for wages and an adequate work performance is enough. A small business owner is more likely to be on the job at first light, miss the coffee and dinner break and twelve hours later announce he has to finish off for the day because he has to go home and do the business accounting books that he started on Sunday.

Determination and persistence go hand in glove with success. Every new business runs into problems at some time or reaches a stage where the business owner needs to be completely focused and stick with a strategy to make the plans work. Things go wrong from time to time; its normal, determination and persistence are valuable qualities to see through these times.

Aggression in forcing through a business plan may sometimes be the only viable option. Not physical violence but the heightened state of anxiety to push through the plan and make it work with controlled aggression and passion. On the other side of the coin there will be times when the small business owner has to exercise tolerance and just go with the flow.

Many small start up businesses go out of business within 2 to 3 years of starting a new business. A major cause is under capitalisation which basically means they run out of money. Liquidity is a major area of concern for every small business entrepreneur and a cautious approach to a new business can be of considerable value.

There is a strong tendency for a new business start up to borrow money and buy new equipment just to get started. Such businesses are taking a major risk the plans will work. Some plans do work but rarely it is a smooth path and a better option is to build the business and reinvest profits made.

A more cautious approach would be to start a new business without borrowing substantial funds because if the small business owner has the ability to make a success of the business and make money then they can usually do so without external funding and use the profits made to build the business in the future.

The sound reason for a small business or a start up business to borrow money is to already be showing a good financial performance. Use the extra funds to speed up future success while borrowing funds with no track record is a gamble and a gamble which fails only too often.

6 Reasons Why Demand Forecasting Is Important In International and National Businesses

Demand forecasting is a well researched topic, and the most methods used in today’s businesses are relatively new. Setting out goals on sales promotion in international or national business without having relevant knowledge is like jumping from a mountain without having a parachute in your hands. I often find that the first thing people ask me at a conference is the importance of demand forecasting for their companies. In this article I will point out 10 reasons why you need to consider it for your business.

1) Many businesses nowadays provide services and products to their clients without having a clear figure of their demand. Sometimes what they know about their consignments is the deadline they should meet, but missing a proper demand forecasting plan can lead them to not appropriately react to the changes. When a customer is unable to get the product or they want more than once, it can make them to choose the competitor’s product.

2) Marketing gurus of your company may not perfectly promote your sales in case you do now know how much is necessary to produce. If you company overestimates demand, it has a risk of producing too much which can lead you to loss due to holding unsold items. But if it produces too little, there will be a loss of potential profits and your marketing team can not help you in this case too.

3) With the growing tends of globalization and wide range of items in the market coming with different shapes and sizes it is also important to track the demand for each product. The demand for small audio sets, touch-screen audio sets, Bluetooth-enabled audio sets should be considered separately keeping in mind all customers needs.

4) In business battles, especially in international businesses the future prices and costs are not always stable. Demand forecasting should be tied with all profit margins considering the prices and the costs of your production.

5) Changes in technology have contributed towards globalization. The improvements of technology make our lives much more convenient therefore the rules of the game are changing. There should be forecasting about technological change (TC) and its bear upon demand, costs and prices.

6) Besides these all, demand forecasting should be based upon changes in the external environment. As we know a business doesn’t operate in a vacuum. It has to act and react to what happens outside the factory and office walls, and sometimes outside from national borders. With this in mind I want to close up with the 6th reason why it is fundamental for your company.