Facebook and Apple are frequently touted as companies with strategies built on innovation and new product development. The Harvard Business School folks will tell you that innovation is the required strategy to beat the threat of commoditization. But, for the small to mid-sized companies that’s probably not the case.

If you’re running a construction company, a healthcare related organization, an agribusiness or

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Industry Experience:AgriBusiness Services •EggProcessors •FarmingOperations •FertilizerProducers •FoodProcessors •SiloManufacturersConstruction Industry Services •AluminumandGlassContractors •BridgeContractors •BuildingSupplyCompanies •CommercialBuildingContractors •DrywallContractors •LandscapingContractors •MasonryContractors •MechanicalContractors •PlumbingContractors •ResidentialBuildingContractors •SteelandIronFabricatorsHealthcare Services •Assisted-LivingFacilities •ContinuingCareRetirement Communities •HealthcareFoundations •HomeCareNursingAssociations •HospitalAuthority •Individual&GroupMedicalPractices •MedicalBillingServices •Nursing&RehabilitationCenters •PersonalCareFacilities •PharmaceuticalDistributors •Pharmacies •Sub-acuteFacilitiesManufacturing Industry •ToolandDie •Fabricators •MoldExtrusions •SnackFood •Packaging •AluminumSiding •GlassandGlazing •IndustrialandAutomotiveTools

other mid-market company you’ll probablybebetterofffindingastrategy that’s more relevant to your situation.

HarvardProfessorMichaelPorter identifiesthreeprinciplesunderlying strategy: creating a unique and valuable [market] position, making trade-offs by choosing “what not to do,” and creating “fit” by aligning company activities with one another to support the chosen strategy.

Porteralsosuggestedthatcompanies should choose one of three basic strategies to get started: cost leadership (the low cost provider position), differentiation or focus.

If you’ve been in business for any length of time you are already operating under some sort of strategy, although you may not be awareofit.AccordingtoPorter,

DoYouHavetheRight Business Strategy?

RossBuehlerFalk&Company,LLP|CertifiedPublicAccountants1500LititzPike|Lancaster,PA17601|717-393-2700|717-393-1743(fax)|www.rbfco.com ExpectMore…

“The best CEOs I k

now

are teachers, and

at

the core of what

they

teach is strategy

.”

— Michael P

orter

http://en.wikipedia.org/wiki/Michael_Porter

you can determine which strategy you are already engaged in:

•Ifafirmistargetingcustomersin most or all segments of an industry based on offering the lowest price, it is following a cost leadership strategy;

•Ifittargetscustomersinmostorall segments based on attributes otherthanprice(e.g.,viahigherproductqualityorservice)tocommand a higher price, it is pursuing a differentiation strategy. It is attempting to differentiate itself along these dimensions favorably relative to its competition. It seeks to minimize costs in areas that do not differentiate it, to remain cost competitive;

•Ifitisfocusingononeora few segments, it is following a focus strategy.Afirmmaybe attempting to offer a lower

JEFF BlEACHER

“ Financial tools are critical for developing your business strategy. Conducting a thorough risk analysis, cost-benefit analysis, break-even analysis and calculating ROI is important in the planning process.”

KEN FAlK (on the right)

“ We see most mid-market companies using a combination of strategies to effectively go to market. Although it’s difficult, sometimes combining a low-cost provider strategy with a market segmentation strategy can create a niche that generates growth and profits.”

costinthatscope(costfocus)ordifferentiate itself in that scope (differentiationfocus).

The problem many small to mid-size companies face in developing a strategy is that not enough data is collected and analyzed prior to strategicplanning.Manycompanieswill go off-site with a facilitator for a few days to do strategic planning but don’t have the needed data at hand to make well-informed decisions. Therefore, a lot of decisions are made on assumptions and selected reality. Use the Ladder of Inference tool to identify how your reasoning is affecting your selection of strategy.

Priortodevelopingthebeststrategy for your company, these analyses should be done:

Market Conditions and theCurrentContextinwhichyou do business: here you can employaSWOTanalysis(Strengths,Weaknesses,OpportunitiesandThreats),aPESTAnalysis(Political,Economic,Socio-CulturalandTechnologyforces)andlookatyourcore competencies and where you have achieved mastery.

Customers and Stakeholders: Keeping yourcustomershappyandfindingmore customers is the end goal of a growth strategy. Analyze what

DoYouHavetheRight Business Strategy?

RossBuehlerFalk&Company,LLP|CertifiedPublicAccountants1500LititzPike|Lancaster,PA17601|717-393-2700|717-393-1743(fax)|www.rbfco.com ExpectMore…

“Always focus o

n

the front winds

hield

and not the

rearview mirror.

”

— Colin P

owell

http://www.mindtools.com/pages/article/newTMC_91.htmhttp://www.mindtools.com/pages/article/newTMC_91.htm

keeps your customers coming back, why they stay with you, what market segments you are serving well and could serve better and how you reach those segments. A market segmentation strategy is one where you focus on market segments individually and focus on each market’s needs and wants.

Competitors: Competitivepressures are tremendous for small to mid-size companies and

identifying and creating competitive advantages is an important aspect of developing the right strategy. Knowing what the competition isdoingandwhattheirSWOTanalysis looks like helps to guide strategic planning.

Having analytics and data in hand is essential to picking the best strategy, or tweaking the one you alreadyhave.Giveyourstrategicdirection the time and resources it needs to grow your organization (18monthstoseeresultsandtwice as much money as you budget)andyou’llseethefruitsofyour labor.

RossBuehlerFalk&Company,LLP CertifiedPublicAccountants

1500LititzPike Lancaster,PA17601

717-393-2700 717-393-1743(fax)

www.rbfco.com

RBFisaLancaster,PACPAandconsultingfirmspecializinginprovidingaccountingandconsulting services with the highest integrity.

lARRY REICH

“ Understanding key stakeholders and their needs is an important piece of the strategic planning process. We often make assumptions about our stakeholders and only consider customers. But, vendors, influencers, our professional partners and others are all important in our strategic planning process.”

PATRICK GENdRuE (on the left)

“ Creating a competitive advantage, or multiple advantages, will help the underlying foundation of your strategy. A growth strategy needs a strong foundation of excellence in all areas of your business.”

DoYouHavetheRight Business Strategy?

Disclaimer of Liability:Ourfirmprovidesthisinformation for general guidance only, and does notconstitutetheprovisionoflegaladvice,taxadvice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute forconsultationwithprofessionaltax,accounting,legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particularsituation.Taxarticlesarenotintendedtobeused,andcannotbeusedbyanytaxpayer,for the purpose of avoiding accuracy-related penaltiesthatmaybeimposedonthetaxpayer.The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warrantyofanykind,expressorimplied,includingbut not limited to warranties of performance, merchantability,andfitnessforaparticularpurpose.

““Without strategy,

execution is aimless

.

Without execution,

strategy is useless.

”

— Morris Cha

ng

Ross Buehler Falk & Company, LLP | Certified Public Accountants1500 Lititz Pike | Lancaster, PA 17601 | 717-393-2700 | 717-393-1743 (fax) | www.rbfco.com

Disclaimer Expect More…

Executing on Strategy

So, your strategic planning process is complete and it’s time to execute. Uh,oh. Here’s where most companies fail. Successful execution requires several things: clear goals for everyone, metrics or ways to measure the progress toward those goals and an accountability loop that tracks and reports on whether people are meeting their goals. It’s basic good business and a major problem for most companies.

Research from the Project Leadership Associates Study shows that:

• 36% of executives acknowledge a lack of clarity and/or consensus regarding overall strategic direction

• Up to 85% of employees have never been exposed to the strategy or plan in any form

• 68% of executives agree that day-to-day firefighting inhibits focus on longer-term strategic priorities.

When executives lack clarity on the strategy there is a tremendous waste of time and resources due to a culture of indecision and inefficiency. People aren’t exactly sure what to do and so they do the best they can, which is often not aligned with the strategic intent of the organization but is more aligned with “business as usual.”

Organizations who take the time to make strategic initiatives crystal clear to all of their employees are the ones who win. Take the “hallway walk” and ask random employees on your walk what the company’s strategy is – this exercise will show you immediately, and simply, how deeply (or not) your strategy has been integrated into everyone’s work.

The most fundamental parts of your strategy should answer these three questions, and your people should be able to easily and clearly state the answers:

• Who are we?

• Where are we going?

• How are we going to get there?

Use this pyramid to better understand how to integrate strategy and to create a framework to tie it all together:

At the top of the pyramid is your Process for Accountability. Getting this right is crucial for successful execution. Many organizations are challenged by accountability because there is so much activity within an organization that looks like progress, but can just be “the way we do things around here.”

Successful execution comes from clearly defining a goal, setting the activities required to reach that goal, determining who will complete those activities, how the progress will be measured and who is ultimately responsible for the outcome.

Organizations without a culture of accountability will face an uphill battle in executing their strategy, no matter how well intentioned. For help with changing your culture to one of accountability and for more information on processes you can incorporate into your organization, contact Jeff Bleacher at Ross Buehler Falk & Company (jbleacher@rbfco.com).

Processfor

Accountability

Defined Execution Plan

Actionable Strategies

Clear Rationalized Vision

Solid Business Model

Where are we today?• Executive Committee Structure • Deployment Workshops • Decision-making Process

• Key Measures • Key Priorities / Initiatives • Management Action Plans • Risks

• Target Market • Offering Portfolio • Strategy Mantras • Strategic Roadmap

• Vision Statement • Quantified Vision

• Mission • Core Values • Competitive Anchor

Who must do what by when?

How are we going to get there?

Where are we going?

Who are we?

Is Your Strategy Right for You?

Ross Buehler Falk & Company, LLP | Certified Public Accountants1500 Lititz Pike | Lancaster, PA 17601 | 717-393-2700 | 717-393-1743 (fax) | www.rbfco.com

Expect More…Disclaimer

Bowman’s Strategy Clock can help you understand how companies use strategy in the marketplace. The different combinations of price and perceived value create positions of competitive advantage. By understanding these eight basic strategic positions, you can analyze and evaluate your current strategy in view of your overall competitive position, your internal operations and culture and your ability to make moves against your competitors.

In truly competitive markets Positions 6, 7 and 8 are not sustainable. Price and perceived value must be aligned correctly in the customer’s eyes or you will lose your buyer to a competitor offering better products or services at a lower price. In your strategic planning, focus on how you can increase your perceived or real value to your customers if you want to move up in the food chain.

Click here to learn more about these strategic positions and Bowman’s Strategy Clock »

Differentiation

LOW VALUE /STANDARD

PRICE

INCREASEDPRICE / LOW

VALUE

INCREASEDPRICE /

STANDARDPRODUCT

FOCUSEDDIFFERENTIATIONHYBRID

LOWPRICE

LOW PRICE/ LOW VALUE

1

2

34

5

6

78

12

3 4

56

7 8

12

3 4

56

7 8

Differentiation

LOW VALUE /STANDARD

PRICE

INCREASEDPRICE / LOW

VALUE

INCREASEDPRICE /

STANDARDPRODUCT

FOCUSEDDIFFERENTIATIONHYBRID

LOWPRICE

LOW PRICE/ LOW VALUE

1

2

34

5

6

78

12

3 4

56

7 8

12

3 4

56

7 8

Differentiation

LOW VALUE /STANDARD

PRICE

INCREASEDPRICE / LOW

VALUE

INCREASEDPRICE /

STANDARDPRODUCT

FOCUSEDDIFFERENTIATIONHYBRID

LOWPRICE

LOW PRICE/ LOW VALUE

1

2

34

5

6

78

12

3 4

56

7 8

12

3 4

56

7 8

Differentiation

LOW VALUE /STANDARD

PRICE

INCREASEDPRICE / LOW

VALUE

INCREASEDPRICE /

STANDARDPRODUCT

FOCUSEDDIFFERENTIATIONHYBRID

LOWPRICE

LOW PRICE/ LOW VALUE

1

2

34

5

6

78

12

3 4

56

7 8

12

3 4

56

7 8

Differentiation

LOW VALUE /STANDARD

PRICE

INCREASEDPRICE / LOW

VALUE

INCREASEDPRICE /

STANDARDPRODUCT

FOCUSEDDIFFERENTIATIONHYBRID

LOWPRICE

LOW PRICE/ LOW VALUE

1

2

34

5

6

78

12

3 4

56

7 8

12

3 4

56

7 8

Differentiation

LOW VALUE /STANDARD

PRICE

INCREASEDPRICE / LOW

VALUE

INCREASEDPRICE /

STANDARDPRODUCT

FOCUSEDDIFFERENTIATIONHYBRID

LOWPRICE

LOW PRICE/ LOW VALUE

1

2

34

5

6

78

12

3 4

56

7 8

12

3 4

56

7 8

Differentiation

LOW VALUE /STANDARD

PRICE

INCREASEDPRICE / LOW

VALUE

INCREASEDPRICE /

STANDARDPRODUCT

FOCUSEDDIFFERENTIATIONHYBRID

LOWPRICE

LOW PRICE/ LOW VALUE

1

2

34

5

6

78

12

3 4

56

7 8

12

3 4

56

7 8

Differentiation

LOW VALUE /STANDARD

PRICE

INCREASEDPRICE / LOW

VALUE

INCREASEDPRICE /

STANDARDPRODUCT

FOCUSEDDIFFERENTIATIONHYBRID

LOWPRICE

LOW PRICE/ LOW VALUE

1

2

34

5

6

78

12

3 4

56

7 8

12

3 4

56

7 8

Low Price/Low Value: The “bargain basement” position. You’ll have to tightly

manage costs, sell volume and continually attract new customers. “Cheap stuff at a cheap price.”

Differentiation: This strategy requires that products and services actually have greater value through specific attributes and characteristics that add value. Google, for example, actually is a better search engine than any of its competitors. When true differentiation is achieved then branding is a natural outcome of market acceptance.

Low Price: A balancing act of low margins with high volume. Walmart is the poster child of this position and has been successful in getting suppliers to play the game with them on the promise of high volumes.

HYBRID: (moderate price/moderate differentiation): Quality and value are good but not significantly different. “Me,

too” products and services abound with this strategy. Differentiation for many companies comes from service factors, not product attributes.

Increased Price/Low Value: The monopoly position where customers have to pay the price you require even if you

aren’t providing the value. In a competitive market economy, monopolies don’t last long.

Low Value/Standard Price: If you have a low value product, generally competitive pressures will drive down your prices. This is a short-term strategy in a

market driven economy.

Increased Price/Standard Product: A short-term strategy for increasing prices without increasing value. Generally not a sustainable move, but one that can take advantage of specific market conditions like a major competitor exiting the market segment.

Focused Differentiation: Luxury goods embrace this strategy with highly targeted markets and high margins. This is branding on steroids built on product differentiation and high design values. True innovation embraces this strategy as well in its initial offering and then is often the catalyst for a new category to open up to the marketplace; i.e. Apple and its iProducts.

Differentiation

LOW VALUE /STANDARD

PRICE

INCREASEDPRICE / LOW

VALUE

INCREASEDPRICE /

STANDARDPRODUCT

FOCUSEDDIFFERENTIATIONHYBRID

LOWPRICE

LOW PRICE/ LOW VALUE

1

2

34

5

6

78

12

3 4

56

7 8

12

3 4

56

7 8

http://www.mindtools.com/pages/article/newSTR_93.htm