VANTAGE ASSOCIATES, INC. MANAGEMENT CONSULTANTS STRATEGIC PLANNING Transforming Vision Into Action Vision Vision Strategy Strategy Structure Structure Systems Systems Culture Culture © Vantage Associates, Inc.
VANTAGEASSOCIATES, INC.MANAGEMENT CONSULTANTS
STRATEGIC PLANNING
Transforming Vision Into Action
VisionVision
StrategyStrategy StructureStructure
SystemsSystems CultureCulture
© Vantage Associates, Inc.
An Introductionto Strategic Planning
VANTAGEASSOCIATES, INC.
MANAGEMENT CONSULTANTS
VANTAGEASSOCIATES, INC.MANAGEMENT CONSULTANTS
Top Management Defined
The task of thinking through the mission of the
business, that is, of asking the question "What is
our business and what should it be?" This leads
to the setting of objectives, the development of
strategies and plans, and the making of today's
decisions for tomorrow's results.
Peter Drucker
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Strategy = A coherent set of time-sequenced actions aimed at gaining a sustainable advantage over competition and improving position with customers.
Planning = The process of making decisionsconcerning the systematic allocationof resources.
Strategy Vs. Planning
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If you do what you have always doneyou will get what you have always got
-- or less.
Strategic Planning
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Definition of Insanity
Insanity is doing the same thing over and over again ...
each time expecting different results
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Strategic Planning
Planning is a tool for managing the change every organization must undergo
Your planning process should recognize the key ingredients to successfully manage change
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MANAGEMENTCOMMITMENT
SPECIFICACTION STEPS
SUCCESSFULCHANGE
+
+
Requirements for Successful Change
COMMONVISION
1. You must have a commonVision of what you are changing toand why
2. Employees must see thatManagement is committed to achievingthe Vision
3. You must define the specific stepsyou will take to reach the Vision
Only then can you manage changesuccessfully
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Manage change proactively Improved trust and
communications Effective allocation of
limited resources
Improved organizational performance
Increase focus
Provide a catalyst for action
The Planning Process Should:
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The only purpose of planning is to improve performance.
Planning is an evolutionary process that can be improved with each planning cycle.
Planning is a continuous process, not an activity to be completed in a month or two.
The real value in planning is in the process, not the document.
Uncertainty about the future is the reason for planning, not an excuse for not planning.
Our Planning Philosophy
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Characteristics of High-Performing Organizations
Leadership
Common understanding of mission/purpose
Enthusiastic about mission/purpose
Open communications -up, down, and laterally
High level of trust
Teamwork
High morale
Commitment - sense of urgency
Failure and success are viewed as learning experiences
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Strategic Planning
The strategic planning process can be effectively used to:
– Generate information
– Identify issues
– Improve communications
– Reinforce culture; i.e., teamwork
– Identify possible crisis points
– Enhance decision making
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Board/Top Mgmt
Input Direction
Mgr/Employees
PLANNING
Planning is a Part of a Cycle
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Strategic Planning is a Function and Responsibility of All Managers at All Levels of an Organization
MID- MANAGEMENT/SUPERVISION
PRODUCTION/ENTRY LEVEL
STRATEGIC
TOP MANAGEMENT
TACTICAL
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Three Basic Questions
A Strategic Plan answersthree basic questions about
the organization
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PHASE I: Where Do We Want To Go?
PHASE II: Where We Are Now?
Long-TermView
SituationAnalysis
StrategyPHASE III: What We Must Do To Close The Gap?
Strategic Planning ProcessThree Basic Questions
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Components of a Strategic Plan
The “Three Questions” are too difficult to answer all at once
Planners break these questions down into small components
These individual components add up to answer the “Three Questions”
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PHASE I: Where We Want To Go?
Assumptions WeaknessesStrengths Opportunities Threats
PHASE II: Where We Are Now?
Critical IssuesKey Decisionsand Strategies
Long-TermView
SituationAnalysis
StrategicPlan
PHASE III: What We Must Do To Close The Gap?
VisionConstituentGroups
Mission Values GoalsObjectives(Short & LongTerm)
ActionPlans
Overview of TheStrategic Planning Process
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The Planning Pyramid
VISION
MISSION
VALUES
CONSTITUENTS
GOALS
OBJECTIVES (SHORT & LONG TERM)/STRATEGIES
CRITICAL ISSUES/KEY DECISIONS
ASSUMPTIONSENVIRONMENTAL SCAN
STRENGTHS, WEAKNESSES, THREATS, & OPPORTUNITIES
SITUATION ANALYSIS
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PHASE 1
FINANCIAL PLANNING
PHASE 2
FORECAST-BASED
PHASE 3
EXTERNALLY ORIENTED
PHASE 4
STRATEGIC MANAGEMENT
PLANNINGPLANNING
VALUE SYSTEM MEET BUDGET PREDICT THE FUTURE THINK STRATEGICALLY CREATE THE FUTURE
EFFECTIVENESS OF STRATEGIC DECISION MAKING
ANNUAL BUDGETS
FUNCTIONAL FOCUS
MULTIYEAR BUDGETS
GAP ANALYSIS
"STATIC" ALLOCATIONOF RESOURCES
THOROUGH SITUATIONANALYSIS AND COMPETITIVEASSESSMENTS
EVALUATION OFSTRATEGICALTERNATIVES
"DYNAMIC"ALLOCATION OFRESOURCES
WELL-DEFINED STRATEGICFRAMEWORK
STRATEGICALLY FOCUSEDORGANIZATION
WIDESPREAD STRATEGICTHINKING CAPABILITY
COHERENT REINFORCINGMANAGEMENT PROCESSES
NEGOTIATIONS OF OBJECTIVES
REVIEW OF PROGRESS
INCENTIVES
SUPPORTIVE VALUE SYSTEMAND CLIMATE
-
-
-
Evolution of Strategic Management
Strategic Analysis
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Characteristics of Strategic Decisions
Multiple objectives
Difficulty of identifying good alternatives
Intangibles
Long-time horizons
Many interested factions
Risk and uncertainty
Interdisciplinary problems
Several decision makers
Value trade-offs
Risk attitude
Sequential nature of decisions
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STRATEGIC ADVANTAGE
ST
RA
TE
GIC
TA
RG
ET
INDUSTRYWIDE
PARTICULARSEGMENT ONLY
UNIQUENESS PERCEIVEDBY THE CUSTOMER LOW COST POSITION
DIFFERENTIATIONOVERALL
COST LEADERSHIP
F O C U S
Three Generic Strategies
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EMBRYONIC GROWTH MATURITY DECLINE
SA
LE
S V
OL
UM
EBusiness Life Cycle
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THREAT OF NEW ENTRANTS
THREAT OF SUBSTITUTE PRODUCTS OR SERVICES
COMPETITORSJOCKEYING FOR
POSITIONBARGAINING POWER OF SUPPLIERS
BARGAINING POWER OF
CUSTOMERS
Industry Structure Analysis
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Threat of New Entrants
Economies of scale
Product differentiation
Capital requirements
Switching cost
Access to distribution
Non-scale cost advantages
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Power of Suppliers
Relative number of suppliers
Existence of potential substitutes
Importance of the industry to the supplier
Importance of the input to the industry
Differentiation or switching costs
Threat of forward integration
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Power of Customers
Relative size of customer purchases
Importance of the input to the customer
Differentiation or switching costs
Customer profitability or price sensitivity
Importance of quality
Customer information
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Threat of Substitutes
Price performance of alternatives
Technology innovations
Total product concept
Customer perceptions
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Competitive Rivalry
Numerous or equally balanced competitors
Slow industry growth
High fixed or storage costs
Lack of differentiation or switching costs
Capacity added in large increments
Diverse competitors
High strategic stakes
High exit barriers
Componentsof a Plan
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MANAGEMENT CONSULTANTS
VANTAGEASSOCIATES, INC.MANAGEMENT CONSULTANTS
The Planning Pyramid
VISION
MISSION
VALUES
CONSTITUENTS
GOALS
OBJECTIVES (SHORT & LONG TERM)/STRATEGIES
CRITICAL ISSUES/KEY DECISIONS
ASSUMPTIONSENVIRONMENTAL SCAN
STRENGTHS, WEAKNESSES, THREATS, & OPPORTUNITIES
SITUATION ANALYSIS
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A Vision Statement is a statement of what the
organization would like to be in the future. A
vision is not a statement of who we are or
what we do, but of what we would like to
become.
Vision Statement
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A Vision Statement Should:
Inspire the management team
Motivate employees Focus the organization Communicate the direction
of the organization Challenge everyone to
perform at higher levels Look beyond the
organizations current limitations
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Vision (Examples)
We will be one of the leading producers and marketers of product X in the Southeast.
We will be recognized by our customers as a company that provides superior customer service.
We will exploit our advantage of vertical integration to achieve the lowest cost position and become the dominant supplier in our industry.
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A Mission or Purpose Statement is a statement of
why the organization exist. What need is it
designed to satisfy?
Mission and Purpose are the same thing. They
are used interchangeably.
Mission or Purpose Statement
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A Mission Statement Should:
Focus on the “now” Define the product or
service provided Recognize the target
market or customer base
Begin to distinguish your organization from others
Recognize current limitations
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Purpose (Examples)
To research, develop, and bring to market products which enhance the leisure time of our customers.
To develop economic alternatives to waste disposal and recycling.
To provide to our customers the full range of hardware and software products and services in a way that maximizes long-term profitability
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An organization’s Values are the core beliefs
that drive the behaviors of everyone in the
organization?
Values describe the culture of the
organization. Values tell employees what it is
like to be a part of the organization.
Values
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A List of Values Should:
Contain a list of five or six core beliefs
Include the values you already share as well as other values you are working to develop
Identify principals that guide your personal and professional life
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Values (Examples)
Excellence in customer service
Financial stability
Personal and business integrity
Professionalism
Teamwork
Trust
Mutual Respect
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An organization’s Constituents are those
individuals or groups that can have a positive
or negative impact on your organization?
Constituents usually cannot dictate what you
do, but they can create problems when they
disagree with what you want to do.
Constituents
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Constituents Should Include:
Groups internal or external to the organization
Groups that are directly or indirectly involved
Groups that want you to success or
Groups that want you to fail
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Constituent Groups (Examples)
Stockholders
Employees
Competitors
Media
Professional/trade associations
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Goals are the things the organization is trying
to achieve over the long term.
Goals are developed to address specific
constituent groups and are enduring and
timeless.
Goals
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Goals Should:
Address each of the constituent groups already identified
Be unique for each group or the groups can be combined
Define what we are willing to strive for with that Constituent
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Goals (Examples)
We will make sound investment decisions such that we maximize the long-term return to our stockholders.
We will create an environment which challenges our employees and encourages their development.
We will monitor and develop aggressive responses to competitors’ moves.
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Goals (Examples)
We will develop a proactive approach to the media such that it helps us communicate with our customers.
We will participate in trade and professional associations in an effort to shape the structure of the industry.
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Assumptions are things that you think will
happen but over which you have no direct
control.
Assumptions are the collective view of the
future you are anticipating for your
organization.
Assumptions
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Assumptions Should:
Reveal your expectations for the economy, the industry, the market or the need for your product or service
Address important areas of uncertainty even if they must change later
Form a foundation for decisions about organization’s future
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Assumptions (Examples)
The national economy will continue to grow at 2% per year.
The local economy will grow faster than the national economy.
Raw materials will be available at today’s prices.
New and different types of competitors will enter the market.
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Assumptions (Examples)
The technical skills required in the business will be more difficult to find.
New technologies will create new production methods.
The demand for quality will continue to increase.
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Strengths and Weaknesses are things that are
internal to the organization over which the
organization has some control or influence.
Strengths are things that are positive.
Weaknesses are things that are negative.
Strengths and Weaknesses
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Strengths and Weaknesses Should:
Be significant enough to make a real difference in the long-term success of the organization
Be measured relative to other similar or competitive organizations
Be limited to those things you would be willing to invest in or try to improve over time
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Strengths (Examples)
Customer service
Focus on specific markets
Financial stability
Quality employees
Strong market share
Wide range of products
Technical leadership
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Weaknesses (Examples)
Inexperience in sales
Depth of the management team
Systems and structures not keeping up with growth
Poor internal communications
High employee turnover
High cost structure
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Opportunities and Threats are things that are
external to the organization over which the
organization has little or no control or influence.
Opportunities are things that are positive.
Threats are things that are negative.
Opportunities and Threats
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Opportunities and Threats Should:
Address the economy, the industry, the marketplace, or the social environment
Include things you might want to take advantage of or things you will want to avoid or manage around
Focus on those things that matter
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Opportunities (Examples)
Rapid change of technology
Deregulation
New product applications
Changing customer tastes
Growing customer base
International markets
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Threats (Examples)
Increasing competition
Modifications to tort reform
Adverse federal initiatives
Increasing environmental concerns
Growing price sensitivity
Aging customer base
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Objectives are things that are measurable
and achievable in a specific time frame.
Short-Term is usually one year or less.
Long-Term is usually three to five years.
Short and Long-Term Objectives
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Objectives Should:
Always include a number and a date by which it will be achieved
Usually include both a long-term and a short-term component
Focus on those areas of the organization that are truly measures of success
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Objectives (Examples)
Revenues
Profits
Number of employees
Volume of business
Return on equity
Gross margin
Error rate
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Critical Issues are things that stand in the
way of you achieving your objectives. They
are the barriers to achieving the success you
defined by your Objectives
If you have no Critical Issues, your
Objectives are set too low.
Critical Issues
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Critical Issues Should:
Help the organization focus its energy and resources on the most important areas
Be limited to the vital few items that must be addressed to achieve your objectives
Be identified by referring back to other components of the plan
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Critical Issues (Examples)
Internal communication
Employee morale
Sales capabilities
Research and development
New markets
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Action Plans are the steps you will take to
resolve or eliminate the Critical Issues.
Action Plans
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Action Plans Should:
Identify the specific actions to be taken
Identify the individual responsible for seeing that the actions are accomplished
Include the time frame or milestones for completing the actions
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Action Plans (Examples)
Implement regular staff meetings beginning first quarter, next year. Responsibility: President
Develop task force to identify employee morale issues and implement programs to improve morale. Responsibility: VP, Human Resources
Identify potential sales seminars and select one for implementation this year. Responsibility: Director of Marketing
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Action Plans (Examples)
Establish a Research & Development Department reporting directly to the President. Hire a Director from outside by second quarter, next year. Responsibility: VP, Engineering
Conduct a market opportunity analysis to be completed by first quarter, next year. Responsibility: Director of Marketing
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Sample
Format
VISION WEAKNESSES
THREATS
MISSION
STRENGTHS
VALUES
OPPORTUNITIES
CONSTITUENTGROUPS
GOALS
• ____________________________• ____________________________• ____________________________• ____________________________
• ____________________________• ____________________________• ____________________________• ____________________________
• ____________________________• ____________________________• ____________________________• ____________________________
• ____________________________• ____________________________• ____________________________• ____________________________
• ____________________________• ____________________________• ____________________________• ____________________________
• ____________________________• ____________________________• ____________________________• ____________________________
• ____________________________• ____________________________• ____________________________• ____________________________
Strategic Plan
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Sample
Format
CRITICAL ISSUES/ACTION PLANS (Con’t)ASSUMPTIONS
OBJECTIVESShort & Long Term
CRITICAL ISSUES/ACTION PLANS
•ISSUE: _______________________
•ACTIONS:• _____________________________• _____________________________• _____________________________
•RESPON: _____________________•TIMING: ______________________
•ISSUE: _______________________
•ACTIONS:• _____________________________• _____________________________• _____________________________
•RESPON: _____________________•TIMING: ______________________
•ISSUE: _______________________
•ACTIONS:• _____________________________• _____________________________• _____________________________
•RESPON: _____________________•TIMING: ______________________
•ISSUE: _______________________
•ACTIONS:• _____________________________• _____________________________• _____________________________
•RESPON: _____________________•TIMING: ______________________
1 YR 5 YR
• ____________________________• ____________________________• ____________________________• ____________________________
•Obj1
•Obj2
•Obj3
•Obj4
Strategic Plan
Implementation
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EXTERNAL ANALYSIS
Opportunities
Threats
Identify Responsibility & Allocate Resources
INTERNAL ANALYSIS
StrengthsWeaknesses
MISSION/PURPOSE
Define the BusinessIdentify the Market
DefineAction Programs
Identify Critical Issues and Key Decisions
FORMULATE STRATEGY
Set Goals
Set Objectives
Strategic Planning Process
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CONDUCTRESEARCH
ANALYZERESEARCH
DOCUMENTPLAN
COMMUNICATEPLAN
#1 #2 #3
STRATEGIC PLANNING SESSIONS
WHERE WE WANT TO GO
WHERE WE ARE NOW
WHAT WE MUSTDO TO CLOSE
THE GAP
ACTIONPLANS
STATEMENTOF
STRATEGY
CRITICALISSUES
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
ASSUMPTIONS
DISTINCTIVECOMPETENCE
VISION
MISSION
VALUES
LONG-TERM
SHORT-TERM
GOALS
OBJECTIVES
OBJECTIVES
MONITORPLAN
FEEDBACK LOOP
Strategic Planning Process
ANNOUNCE TO ORGANIZATION
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Common Blunders in Business Strategy
Making moves inappropriate to the position Building productivity in the wrong way
Underdeveloping strong positions
Underdeveloping weak positions
Going down with the flagship
"Zigzagging"
Joining the other lemmings
Inappropriate turnaround efforts
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Factors Affecting Implementation
Perceived need
Quick results
Endorsement of line managers
Commitment of resources
Clear benefits
Understood concept
Manageable tasks
Past experience
Identified sponsor
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Some Obstacles to Corporate Planning
Difficult to predict future - i.e., competitive moves; new technology
Internal resistance
Requires significant resources
Difficult exercise/hard work
Difficult to achieve common understanding
Requires management and supervisory education
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STRATEGY IS:
IMP
LE
ME
NT
AT
ION
IS:
APPROPRIATE INAPPROPRIATE
PO
OR
GO
OD
SUCCESS: ROULETTE:
TROUBLE: FAILURE:
ALL THAT CAN BE DONE TO ASSURE SUCCESS HAS BEEN DONE..
POOR EXECUTION HAMPERS GOOD STRATEGY. MANAGEMENT MAY NEVER BECOME AWARE OF STRATEGIC SOUNDNESS BECAUSE OF EXECUTION INADEQUACIES.
GOOD EXECUTION CAN MITIGATE POOR STRATEGY, FORCING MANAGEMENT TO SUCCESS.
THE SAME GOOD EXECUTION CAN HASTEN FAILURE.
VERY HARD TO DIAGNOSE, BECAUSE BAD STRATEGY IS MASKED BY POOR EXECUTION.
EVEN HARDER TO FIX, BECAUSE TWO THINGS ARE WRONG.
OR
-
- -
-
-
-
SOURCE: "THE MARKETING EDGE" BY THOMAS BONOMA
Strategy/Implementation Matrix
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Critical Issues, Action Plans
Year Three
Vision, Mission, Values, Goals
Year One
Emphasis Changes Over Time
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Typical Planning Schedule(January 1 Fiscal Year)
JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY
• Collect information and conduct preliminary analysis
• Identify Strategic Issues
• Conduct Strategic Planning Session
• Document Output
• Communicate the Plan
• Develop Company Budgets
• Conduct Quarterly Reviews
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FUNDAMENTALS OF
SALESMANSHIP
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MANAGEMENT CONSULTANTS
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THE MYTHOLOGY OF SELLING
Salespeople are born, not made.
Good salespeople are good talkers.
The good salesperson can sell anything.
A good salesperson can sell to any prospect.
The good salesperson never takes no for an answer.
Selling is a bag of tricks.
People don't want to buy.
The get-rich-quick illusion.
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A GOOD SALESPERSON MUST HAVE AT LEAST TWO BASIC QUALITIES
Empathy
Ego Drive
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SALES PERFORMANCE
ATTITUDE Winner Confidence Action
SKILL Planning Presenting Closing
KNOWLEDGE Customer/Industry Product/Service Competition/Market
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WHAT IS SELLING?
A PROFESSIONAL SALESPERSON:
– Knowledgeable
– Motivated to Serve
– Personal Code of Ethics
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WHAT IS SELLING?
KNOWLEDGE REQUIRED:
– Product
– Competition
– Human Behavior
– Customers
– Buyer - Business, Company, Needs, Plans, Problems, and Buying Motivation
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JOB OF A SALESPERSON
Self-Management
Administration
Prospecting/Client Development
Selling
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CAN SELLING BE PRACTICED PROFESSIONALLY?
CHARACTERISTICS OF PROFESSIONAL SALESPEOPLE
Capacity for hard work
Empathy
Competitive
Ability to live with rejection
Organized
Enthusiastic
Integrity
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EFFECTIVE SELLING
Define the product
Define the market
Identify and evaluate the competition
Set objectives/develop a plan
Implement the plan
Evaluate results
Measure results/refine as required
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HELPFUL PERSONALITY TRAITSIN SELLING
Intelligence
Social intelligence and
tact
Dependability
Timing
Assertiveness
Self-confidence
Vocabulary
Imagination
Determination
Self-management -
Discipline
Responsibility
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NON-TRADITIONAL APPROACHES THAT WILL WORK IN THE 90s
Salespeople must be in front of qualified buyers when the
buyer wants to buy.
More selling will occur in the “needs analysis” phase of the
sales cycle.
All products and services must be differentiated in the mind
of the buyer
Be customer driven
Remember the Four Fs: Be fast, friendly, flexible, and
customer focused.
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EVALUATE AND TAKE ACTION!
TO BE A SUCCESSFUL SALESPERSON, YOU NEED TO KNOW:
Your customer and his/her business
Your competitors and their products, services,
programs, strengths, and weaknesses
Your trade allies and their products, services,
programs, strengths, and weaknesses
Your company and its policies
Your products, services, and programs