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Before committing to an enterprise-wide e-procurement initiative,
it is important to first consider where your company plans to strategically
move in the next one to five years. Therefore, it will be necessary
for you to examine the important issues that will face your company
in this time period.
A Basic Business Strategy will
help you to learn about the elements of as practicable strategy for
your company. First, gather your strategic team to discuss and reach
agreement on the following:
- The core competency and focus of the company over the next few
years. What makes your company unique, and how can you remain
ahead of the competition?
- New markets and expectations for growth. Why are you selecting
new target markets, or why are you focusing on existing ones?
- Expectations of how your products and services will change during
that time. What new innovations in marketing, customer service,
and product design have you planned?
- Key ways in which the products will be different from competitors.
Is your strategy based on price, quality, reliable delivery schedules,
new technology, or being able to customize the product to your client's
needs?
- Critical changes in customer support, conformity to international
standards, or greater quality. How will you delight the customer
with an improved product or service?
- How e-procurement may affect the traditional supply chain in terms
of purchasing, inventory management, customer management and logistics.
What are the changes that will be needed in your policies, processes,
systems, and procedures?
- Prioritization of goals, risks to the company, and change management
issues. Some staff members may be resistant to change.
How will you articulate your goals and plan for smooth implementation
of them?
- Staff, financial and technical resources needed, project plan,
timelines, and financial budgets. In other words, who, what,
when, and how much is needed to achieve your strategic goals?
One of the greatest mistakes made by managers of small businesses
is their failure to clearly define the market to be served. Such
a mistake is a great loss for a small business because they are most
able to access market segments that large enterprises either overlook
or consider too small to be profitable. Therefore, successful
businesses have well-defined descriptions of their prospective customers.
The success of their strategy is heavily dependent on how precisely
they define their targeted customers.
Finally, it is important to regularly review your strategy in order
to make necessary adjustments and course corrections. The entire
e-procurement process is an upward spiral that starts at the strategic
level, followed by planning and preparation and continued by the implementation
and execution phase. During the last phase, the monitoring stage,
the e-procurement process will be reviewed by comparing the results
of the e-procurement process with your initial strategy. The spiral
eventually closes itself and then advances to begin a new and more advanced
strategy for the next e-procurement phase.
Basic Business Strategy
Following is an outline of a basic business strategy:
Executive Summary. Brief statement of the products manufactured,
what makes the firm successful, advantages over competitors, and goals
for the next five years.
History of the Company. Date founded, revenue and profit history,
growth and contraction of number of employees, product diversification
as the company expanded, successes, challenges etc.
Current Company Profile. Summary of products manufactured,
organization chart or “organigram”, number of current customers, revenue
and profits last year, major projects achieved last year, and planned
for the next five years.
Prospects For Growth. Competitive advantages (why is the product
unique?), competitive challenges (what could threaten the profitability
of the company?), and competitive opportunities (what are the factors
that could increase the growth of the company?)
Industry Trends. Ask customers what they will need in the
future and how they think the market will change.
Customers. Who are they, where are they located, and why did
you select them? What is the profile of new customers who you would
like to have?
Competition. Who are your main competitors and why are they
considered competitors (e.g., better product, bigger market share, found
in more countries, greater name recognition)?
Management ⁄ Staff. Profiles of company president ⁄
CEO, its directors, and a sample of rising stars within the company.
Marketing Strategy. Summary of direct mail, print, radio,
television, telephone cold calling or on-site visits, trade show, e-mail,
Internet, or other -ms of advertising and marketing planned, and summary
of in what countries or regions the marketing campaign will take place.
Pricing Strategy. Summary of pricing strategies for your target
markets in comparison to the competition. Will the product be priced
high or low? Why?
Distribution. Who will handle the distribution and shipping
of the product?
Customer Service. Summary of after-sales service plans, establishment
of customer service center, and overall plans to keep the customer satisfied.
Manufacturing Plan. Number of units to be produced, source
of materials, location of manufacturing sites, and the challenges, changes,
and risks foreseen.
Financial Projections. Cash flow or annual total revenue anticipated
against total costs or budgeted expenses.
Budget. Total annual cost of operation including personnel,
rent, equipment, billing system, printing, marketing, travel, etc.
Balance Sheet. Current liquidity and cash position.
Break-Even Analysis. Total number of units to be sold to make
neither a profit nor loss.
Source of Financing. From where will adequate financing come
to sustain the business?
Distribution of Profit ⁄ Expansion Plans. Summary of
where profits are planned to be distributed for company expansion.
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