3 posts tagged “edgar”
Many of us tend to get caught up on the daily routine of keeping things running and forget to manage the big picture. But it is crucial that you set aside some time to work on the strategy of the company. Otherwise, one day you can find yourself barely trying to keep afloat or worse out of business altogether.
Strategy entails focusing on activities to maintain competitive, providing leadership for your company. This means keeping in touch with customer changing needs. By focusing on your customer, you quickly realize that for example they are no longer buying CDs but downloading music. So rather than doing business as usual, the leadership has to be there to provide the direction to address the change in customer needs.
Strategy can also be applied on a personal basis. A simple example is if you are currently investing in some financial instrument such as stock, bond or money market but getting a return far less than the debt you are carrying. Does this really make sense, the answer is obviously no, you are better off paying off the debt or loan first. See the big picture, that by paying off your credit card debt at 20%, you are actually getting an equivalent of 20% return on your money. Rather than making a possible 5% if you were in invested in a GICs or possible 10% in a stock.
The late Peter Drucker summed it up best when he said, “Leadership is doing the right things, and management is doing things right”. Remain strategically focused and truly be the captain of your ship.
One of the key goals of management is to position the company so it can compete effectively. No one has articulated this better than Michael Porter. Michael porter is a business strategy professor at Harvard.
One of the textbook examples of how to position a company is Dell. Dell’s strategy of uniquely serving its customers directly and customizing computers to users needs had been effective since its launch. Dell was able to carve out significant market share that allowed it to grow to a $50 billion dollar company.
But last year Dell was having a hard time competing. HP had come back strong and started taking back some market share. This had forced Michael Dell back to the position of CEO in Jan 31st of this year.
So what does Dell do? They come up with a retail strategy. They start selling computers through Walmart and so far it has been successful. They have plans to expand by selling in other retail outlets.
What does this say about sustainable competitive strategy? This says that there is no such thing as sustainable. A strategy has a finite life. You constantly have to be in touch with the market and customers to satisfy their needs. Your strategy will eventually need tweaking due to market forces, forces such as those that Porter talks about in his five-force analysis of industry. One of those key forces is technology.
It has been my sentiment ever since high school that you cannot be rich unless you work for yourself. In other words you have to start your own company. Granted that many people are not entrepreneurs, and like the security of a job. But in the end, it goes back to fundamentals of risk and reward. In order to gain that reward you must take on risk. The bigger the risk, the bigger the reward. But as you are well aware that it could also go the other way. You can risk big and lose big.
Nevertheless, my sentiment is echoed in a new book, Get Smarter: life and business lessons, by billionaire Symour Schulich, he says " I don't think a person can ever get really rich working for someone else, although there are forms of psychic and altruistic satisfaction in many career lines".
