Enterprise Growth Strategy

Vision, Planning and Execution

Dhirendra Kumar

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9780566091988
• eBook ISBN: 9781317142713
• Topic: Business
• Subtopic: Business General
• Index: Business

Even during economic downturns businesses have to grow to survive and compete in domestic and international markets. There is always a need to plan for future growth. Enterprise Growth Strategy presents the total process of a growth strategy. Dr Kumar is an engineer who entered the academic world following a long career in manufacturing business and has since taught almost every aspect of business and management. The 'growth strategy' concept he has developed is comprehensive and manifestly practical. Dr Kumar describes mechanisms by which businesses can gain market share; develop, modify, or upgrade products; acquire new or expand existing businesses; transform resources to increase revenue and profitability; reduce cycle time; and empower business associates. Quality concepts - market growth, financial and core competency - are outlined and a variety of growth strategy tools presented. The relationship between continuous improvement metrics and business growth metrics is explained and their relevance to financial performance examined. Examples and case studies are presented to illustrate how different business areas such as Sales and Marketing; Product Development; Operations; Support Services; and the Finance function, contribute. Leadership responsibilities, employee participation in the execution of growth strategy, culture and change issues are also discussed. Business leaders, managers and consultants, academics and teachers, as well as higher level students on business-related courses will find enormous value in this book. It is unusual, if not unique, in presenting the total process from vision to mission, to development of a growth strategy, implementation of initiatives, use of tools, and measurement of both operational and financial outcomes.

CHAPTER 1
Enterprise Vision

Global competition is on the rise, and the increasingly complex global market is creating a sense of urgency for U.S. businesses to transform their business practices, technologies and resources into a highly flexible state to continue to compete and grow in the market. If you analyze some of the fast-growing economies of Southeast Asian countries, you will observe the following:

China’s Economy

On almost any product you use daily, for example, clothing, shoes, furniture and tools, there is a high probability that you will find the label ‘Made in China’. China is now moving into more sophisticated products, either through their own development or acquiring them from other countries. China has, for example, purchased personal computer (PC) products from IBM.

China is transforming itself into one of the great, if not the greatest, superpowers in the world. China may end-up with the biggest, longest, fastest and tallest of just about everything there is. American business people must try to understand the rate at which China is growing. Fishman (2006) comprehends the economic side very well and presents a true growth picture of China. Given the rate at which the Chinese economy is growing, it is possible that the twenty-first century may belong to China.

India’s Economy

India has provided information technology-related support services to the customers of several major U.S. manufacturers since the early 1990s, including Del, IBM and Intel. These are low-paid office jobs – workers in India are paid less than one-third of salaries in the U.S. – so these companies have drastically reduced their service costs.

As highly technically trained people became available in India and Internet communication became easier, higher level jobs have started migrating to India. A significant amount of software development work is done in India today, which has created highly paid professional jobs. Development is happening in other professional areas as well, for example, product design, finance and biomedical products development and testing.

India was a British colony for almost 200 years before being given independence in 1947. English was the primary language of instruction and communication in most colleges and universities and this tradition continued after independence. Most of the elementary schools were teaching English as a second language as early as the third grade.

Currently, India has the language advantage over China in the area of professional jobs, but this will not last very long. China is implementing English as a second-language program in elementary schools.

Europe is not far behind. There are some areas where Europe is taking the lead over U.S. products, for example, automotive, office equipment and Enterprise Resource Planning (ERP) systems. The following are partnership examples between the U.S. and the other countries:

• A Chinese manufacturer produces small automotive components and supports a U.S. distributor. The U.S. distributor provides technical support to the Chinese manufacturer to produce and deliver quality product, on time and at a competitive price to meet U.S. customer requirements.

• A German office products manufacturer established a partnership with a U.S. office service company to provide German-designed and manufactured products in the U.S. and utilizes the U.S. service company’s network to support German office products.

• A U.S. manufacturer of medical devices and equipment has developed a partnership with Indian business leaders. This partnership will develop a state-of-the-art hospital facility, where the U.S. manufacturer will provide the equipment and the Indian leadership will provide the facility and people resources (doctors, nurses and administrative staff). The medical cost of treating patients will be a fraction of the U.S. cost.

Large U.S. businesses may have significant levels of internal resources to support the growth strategy concept, but small- to medium-sized businesses would need a network of consulting partners to transform them quickly: they would make little progress on their own.

Consulting organizations are generally separate businesses and can provide customized consulting to U.S. businesses to make significant improvements to their products/services, revenue, profitability and value chain. These consulting organizations must also share the same commitment to improving U.S. businesses as the U.S. businesses’ leadership. Such a partnership would produce an extraordinary reward in terms of return on investment (ROI) for the U.S. businesses and stakeholders: the partnership will accelerate the U.S. position in the global market at this critical time. The concept presented in this book is applicable to all sizes of businesses.

Continuous improvements (kaizen, lean, process re-engineering, Six Sigma, etc.) have kept U.S. businesses competing in the global market. These improvements have led to cost and waste reduction, quality improvements and provided additional capacity, but they have not automatically led to growth in sales (revenue) and profitability, and reduction in business cycle time.

Some customers who demand too much from their suppliers – particularly by forcing suppliers to discount prices too drastically – for example, Wal-mart. These price discounts are achieved through reducing costs: the result is increasing margins. This kind of customer places suppliers in financial jeopardy and in such a situation many customers will look outside of the U.S. for suppliers.

Businesses constantly have to find new customers or a new market as they lose their existing customers. Another strategy to stay in business is to develop a growth plan through new products, although this may require some organizational adjustments/changes, the most difficult of which is cultural change to compete in this globally competitive market.

The U.S. economy has to find a way to grow and the business growth strategy is one way. Continuous improvement is just one element of growth strategy process. Other elements include developing new products and/or modifying/upgrading the existing products, gaining market share and increasing opportunities as well as making cultural changes to meet the globally competitive market.

SUCCESS THROUGH GROWTH STRATEGY

The past U.S. experience of competing would not be the model for survival/leading in the future. Given the new realities of the marketplace, to compete and lead in the global market along with changing customer requirements, U.S. businesses need a holistic approach to implement a growth strategy. They need to adopt:

1. A dynamic business strategy

2. Customer/market diversity including products/services growth

3. Organizational transformation including cultural change

4. Continuous improvement – cost reduction, cycle time reduction, quality improvement, inventory reduction, competitive pricing and communication

5. Continuing education and training of the workforce.

Dynamic business strategy It needs to link to vision, mission, strategy and business growth through products/markets. Most businesses need a breakthrough growth planning process specifically designed for their products/services and resources. A growth plan will help businesses to adopt new customers/markets and opportunities.

If a business is already in the financial crisis mode and experiencing major erosion in the profit margin, then the business would need a turn-around plan before the business would need a growth plan.

Customer/market diversity including products/services growth Customers are in charge and are the driving force behind changing businesses everywhere. Customers are forcing suppliers to reduce prices and demanding customization with high-quality products and services and on time delivery at no additional cost. If suppliers do not meet demands, customers change suppliers.

Businesses have to survive and grow, and they can achieve this through finding new customers, diversifying into new markets, and/or new products/services. They also need to develop information systems to monitor existing customers and markets as well as developing markets.

Before globalization, U.S. businesses did not have to be market- or customer-driven, nor did they have to invest resources and time in searching for new customers. Most of their efforts were devoted to internal activities of continuous improvement (CI). In today’s market/customer driven economy CI activities are only a partial solution to business problems and do not support businesses in finding new ways to grow.

Businesses need to collect external information about customers and their specific needs, competitors, markets, materials, suppliers, etc., and this is an ongoing process which necessitates visiting existing and prospective customers through calling them and/or getting to know them personally.

The business goal must be to find new customers and markets, and the business growth strategy must be to find a balance between the forces driving the market and the internally focused CI. Balanced growth strategy would be more competitive and provide a competitive advantage.

Organizational transformation including cultural change Businesses must align with their marketplace to meet customer needs and survive and lead in this globally competitive market. Successful businesses study and analyze the market very carefully, applying their competency in developing products and processes efficiently which allows them to offer products/services of high quality at competitive prices.

These activities may require some organizational adjustments and employees must be ready to support the changes. Employees also need to understand that cultural change must be a part of transformation and business growth strategy.

Continuous improvement (CI) This is another key challenge for all businesses. Customers are constantly demanding lower prices and comparing the U.S. suppliers with foreign suppliers: CI has become a necessity to survive and compete in the new economy.

CI is even more important when a business is trying to gain new customers. Because these customers are already being served well by other businesses (suppliers), to gain these customers, your business will either have to offer a superior product/service or a lower price.

Continuing education and training of the workforce This is a critical requirement for any business to survive. As technology changes so do processes and procedures. Employees need to be educated and/or trained as the technology change...

Table of contents

• Cover Page
• Dedication
• Title Page
• Copyright page
• Contents
• List of Figures
• List of Tables
• List of Abbreviations
• Preface
• Chapter 1 Enterprise Vision
• Chapter 2 Enterprise Vision, Strategic Planning and Structure
• Chapter 3 Growth Strategy Initiatives and Elements
• Chapter 4 Growth Strategy Tools and Implementation
• Chapter 5 People Leadership
• Chapter 6 The Strategic Execution
• Appendix A Production System
• Appendix B Glossary
• Index