strategy

THE STRATEGY STATEMENT:

The strategy statement will always appear near the beginning of the business plan. It usually follows your mission statement or short-term objectives, depending upon the format used. Below illustrates two formats you may use for the "Mission and Strategy Statement" section of your business plan.

FORMAT 1 The Mission Statement The Strategy Statement FORMAT 2 The Mission Statement Short-term Objectives The Strategy Statement

Whichever format you decide to use, this section should always follow the Executive Summary of your business plan.

In its simplest form, a Strategy Statement informs investors how your company will succeed and why customers will choose your business over rival competitors. In addition, a typical strategy statement details initiatives that give your business a chance at succeeding where other similar businesses have failed. Before you can effectively develop a strategy statement you will be required to learn some of the components of strategic planning. Before we discuss the components of strategic planning, lets first look at two examples of strategy statements; J&B Incorporated's Strategy Statement and the Sara Lee Company's Strategy Statement.

J&B Incorporated's Strategy Statement:
Individuals buy "how to own and operate your own business" products for one reason and one reason only - THEY WANT TO OWN THEIR OWN BUSINESS. This is the most important key success factor within the industry. Companies currently selling self employment products, however, do not provide sufficient training nor the necessary resources to enable their clients to, first of all, start a business and secondly to operate a business successfully. With our business training course, however, clients will have the opportunity to encounter both of these experiences.

Another key success factor within the industry is price. Management's experience and research has uncovered the fact that individuals want to learn how to operate a business, however they do not want to pay hundreds of dollars in the process. By reducing the number of distribution channels, hiring an in-house sales force, and choosing a low cost media for promotions, J&B is able to set its price at half the price of similar rival products.

Our overall Competitive Strategy will be based on Differentiation and Low Cost Production. Our differentiation strategy focuses on the issues that are most important to the buyers such as product benefits, product features, and price. The low cost production strategy focuses on the issues that are most important to J&B - i.e. maintaining low costs without diminishing quality.

Sara Lee Corporation's Strategy Statement

Invest to accelerate internal growth:

Direct and focus investment spending on strategic opportunities to build share and to accelerate unit volume growth in key product positions.

Develop the lowest cost position in all product categories:

Emphasis size and measure operating efficiencies and cost structures in all areas of the corporation to reduce costs consistently and to increase return on sales without sacrificing quality.

Make Acquisitions:

Acquire businesses which fit Sara Lee Corporation's strategic focus and which provide increased opportunity for growth consistent with our mission.

Leverage brand names and strategically link businesses for synergy:

Generate growth by building and extending brand positions, and improve returns by strategically combining divisions and developing synergies among businesses.

Pursue cross channel distribution for established products, brands, & positions: Increase unit volume and return on sales with cross-channel distribution.

The above strategy statements certainly depict two different formats. J&B Incorporated designed their statement in a paragraph format, while the Sara Lee Corporation elected to list and define each strategy. Other business plan writers combine the two format by discussing a generic strategy in a paragraph followed by a listing of specific strategies.

Developing an effective strategy or series of strategies is possibly the most difficult task an entrepreneur will experience. Many reports suggest, the failure to create and successfully implement effective strategies is one of the most cited reason for business closure. The remaining discussion has been devoted to the strategic planning process. The process will introduce you to various issues to consider when developing your own strategies and strategy statement. At the end of this section, you'll learn three generic corporate strategies; namely, low cost producer strategy, differentiation strategy and focus or niche strategy.