FTM Business Template - Strategic Framework

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Strategic Framework Business Template

What is a Strategic Framework? The Strategy Framework template provides a structured method for planning a business or team strategy. The framework will determine the products and services that will be offered, the markets and customers that will be served and the distinctive capabilities of the business or team.

Why is it relevant? A strategy provides the overall vision, direction and priorities for a team. It will contain the basis on which the business will compete and survive in a competitive market place. Without it, the business or team is often reactive and not aligned to key success factors.

Who needs to be involved? Make sure that the strategy is owned by the most senior manager – for a business this will be the Chief Executive. However, involve a cross-functional team in the development process in order to provide expert inputs and to gain commitment to implementation of necessary changes.

When should you use it? Ensure that the Strategic Framework forms an integral part of the Annual Business Planning (ABP) process. Before you consider forecasts and finances, take time to agree on product and market boundaries. Once set, put formal quarterly review meetings in everyone’s diaries.

How should you implement it? Before setting the framework, ask functional heads around the business to collect and assess Market and Customer Insights (MCI) – “what is happening in our business environment and how does it impact us?” Then plan a workshop where a cross-functional team will review the MCI and make decisions about products and markets as laid out in the Strategic Framework template. Then, translate the framework into tangible changes to day-to-day operations – this will form your overall change programme. Finally, reset the monthly Key Performance Indicators (KPIs) that you use to monitor performance so that you can check if your strategy is correct and if it is happening.



Strategic Framework

This is a case example based on a fictitious company called TVT – all the data is displayed for demonstration purposes only. For a detailed explanation of what each cell is used for please refer to the Virtual Consultant on the following pages.

Form 1: Strategic Positioning

Statement of Strategic Intent

Industry Overview

Frozen food market place is a stable international market dominated by major retail outlets and food service organisations. The essential nature of the product makes it a stable and mature market place. It can be segmented into bulk purchase (such as 1 and 2 litre tubs) and ‘impulse’ purchase (such as Ice Lollies) – this tends to be much more seasonal and susceptible to the weather

Business Drivers

Major trends currently include supplier consolidation (reducing our purchasing power and increasing dependency on sole supplies), escalating food ingredient costs (making it more difficult to maintain margins), and relentless EU legislation (further increasing costs). Consumers are becoming more health aware which is raising increasing questions around the need to legislate, and there is a continuing preference for luxury / higher quality brands

Purpose or Mission Our mission is to be a leading provider of specialist frozen dessert produce to UK retailers before the end of 2010. This will be achieved through a combination of organic growth and acquisition, and through a focus on aligning our business strategy with serving the needs of the major retailers

Unique Capability

We differentiate ourselves from our competition through the levels of service delivered through our supply chain excellence. Whilst we will not compete on price, we will drive our costs down relentlessly so that we will not have a price disadvantage versus our major competitors – this will be increasingly important as the market becomes more global

3 Year Vision

Our three year vision is to build the retail business to a value of £16,000,000 with a single customer representing less than 25% of turnover. We will explore additional product-markets, but will always seek to maintain an limit to the size of the overall portfolio (operating a one-in one-out policy for all future new product introductions

Funding Mechanism

The business will be funded through operational cash-flow for the next two years, but external investment capital will be considered to fund selective investments in acquisitions as we move into specialist UK markets

Growth or Exit Strategy

We will grow the business through selective acquisition of complimentary small businesses, and will float on the UK market before the end of 2015



Form 2: Product and Services

Product Segments Top 3 Current Products Top 3 New Product Ideas Competitors & Substitutes

P1 Frozen Surprise-lite, Arctic range Lo-Cal Walls

P2 Chilled Trio complete, Trio multipack, TVT

2-Fresh, F2006 range C217

P3 Own label Arctic flavours, Moller, Standard

OL - Alpha, Super sweet range

RESEARCH

P4 Ready-to-bake NA NPD required Macphie direct, ABC direct

Form 3: Customers and Markets

Market Segments Top 3 Current Customers Top 3 Target Customers Major Competitors

M1 Major retailers in the UK Tesco, Waitrose, Asda Morrisons Walls

M2 Second tier retailers in the UK

Iceland, 24-7, Co-op Mango, Esso stores. Independents

Indo direct, System-X

M3 Food Service Starbucks, Brakes Sainsbury in-store cafe Indo direct, System-X

M4 Export markets Bechtel retail RESEARCH RESEARCH

Form 4: Product-Market Priorities

Product-Market Matrix M1 M2 M3 M4

Major UK retailers Second tier retailers Food Service Export markets

P1 Frozen H-Green H-Green H-Red H-Red

P2 Chilled M-Red H-Green M-Green Research-Blue

P3 Own label L-Amber M-Green M-Amber Research-Blue

P4 Ready-to-bake L-Amber NoGo-Black NoGo-Black NoGo-Black

Form 5: Financials Forecast

Current Year 1 Year 2 Year 3 Financial Assumptions

P1 £5,000,000 £7,000,000 £7,500,000 £8,000,000 The frozen market place will continue to grow as more luxury items are developed for this category, and health products such as Low Fat become generally accepted

P2 £2,000,000 £2,500,000 £3,300,000 £4,000,000 Whilst the market is stable, there are still opportunities to grow sales through wholesalers. It will be possible to achieve this through existing relationships

P3 £2,500,000 £2,500,000 £2,500,000 £2,500,000 Food service will continue to be highly competitive and cost reductions across the product range will be required

P4 £0 £500,000 £1,000,000 £1,500,000 Ready-to-bake is exciting but still unproven market space and needs more research before committing resources

£9,500,000 £12,500,000 £14,300,000 £16,000,000



Form 6: Core Process Model

Core Process Deliverable or Key Performance Indicator Status Change Programme

People & Leadership

Clarity of direction and executive decision making at both strategic and operational levels - including the management and motivation of all staff. DELIVERABLE: Motivate team with less than 10% turn-over

Green

Industry Drivers

Effective external scanning process to proactively identify and analyse opportunities and threats in the market. DELIVERABLE: 100% of major trends are reported in the internal quarterly MCI reports

Amber

Need to establish a formal quarterly external analysis and dissemination programme across all functions

Strategy & Goals

Appropriate strategic direction in terms of current and future product-markets and defendable source of competitive advantage. DELIVERABLE: At least one clear USP reflected through all functional teams

Green

Innovation & Change

Creating of a culture of creativity, innovation and constructive challenge where it is accepted that doing what we did yesterday will not succeed tomorrow. DELIVERABLE: Active Ideas Pipeline 'beyond NPD'

Red

Need to implement an ideas and innovation process focusing on radical process change and NPD process improvement

NPD & Sourcing

Development of a portfolio of products and services in line with musts and wants of target customer groups as defined in the strategy. DELIVERABLE: Gaps in Product Portfolio addressed in line with roadmap

Green

Brands & Marketing

Positioning of the TVT corporate and product brands as the preferred supplier in our chosen markets. DELIVERABLE: Over 75% unprompted awareness within target customer group in annual survey

Green

Sales Channels

Development of profitable sales in line with strategic targets, and achieving the right level of balance between direct and indirect channels. DELIVERABLE: Quarterly sales in line with revenue and profit targets

Green

Operations & Process

Effective and efficient operational processes delivering against operational KPIs, what is required, when required. DELIVERABLE: Exceeding operational KPIs in all areas of the supply chain

Amber

Need to instigate a programme of complexity cost reduction focusing on product and customer simplification

Finance & Cashflow

Availability of both free cash-flow from operations and external funding for investments as and when required. DELIVERABLE: Financial results in line with Annual Business Plan

Green

Business Governance

Compliance with all legal and ethical requirements, and the effective monitoring and control of day-to-day business activities. DELIVERABLE: Occurrence of monthly meetings and maintenance of risk register

Red

Need to identify industry best practices for all core processes and instigate a regular audit / compliance process



Graphic: Core Process Model

Core Process Model

Form 7: The Top Team

Cornerstone Person Prime Responsibilities Status Change Programme

Chief Executive

John Mactear Leadership, motivation and direction. Networking within the industry and being seen as a 'thought leader'

Amber Need to build industry network and establish influencing process

Operations Joanna Derry Efficient and effective production and supply chain including development of food technologies to support the planned NPD programme

Green

Sales & Marketing

Maid Bhatti Securing of repeatable profitable sales growth, researching the export market space, and developing the TVT brand

Amber Need to develop partner and channel management programme / capability

Finance Jaz Qadeer Cash-flow management and investment for growth Green

Non-Executives

Patrick Harper

External challenge, issues of Governance, and access to networks for sales and potential funding

Green



Virtual ConsultantTM

The Virtual ConsultantTM provides a step-by-step guide to completing this business template. It is worded as a

series of questions designed to make you stop and think about this topic in a challenging and creative way – as if a

business coach or consultant was sitting next to you.


Industry Overview What is the name, size, growth and description of the industry in which you compete?

Business Drivers What factors are currently determining success in this industry - what are the trends? Reflect on all of the changes currently occurring and identify the key opportunities and threats

Purpose or Mission What is the overall purpose for the business or team? Note: this should include a brief statement of what products and services will be provided to which customers and markets. It might also contain an aspirational statement 'To be the number one provider of ....'

Unique Capabilities What is the unique capability or contribution? This will be the Unique Selling Proposition (USP) or source of competitive advantage for an organisation that will ensure that new customers will be attracted, and existing customers will remain loyal over the next three years? Note: reflect on internal strengths that a) give customers something they want, b) are provided at a competitive level of performance, and c) can be sustained over a three year period

3 Year Vision What is the level of ambition in terms of development and growth for the next three years? Explain how different the business or team will be in three years?

Funding Mechanism What is the preferred process for funding the growth of the business or team over the next three years? Note: think about the cash-flow required to fund both ongoing operations and strategic growth. Cash flow is particularly important for some organisations or teams, and a separate cash flow analysis should be completed using a spreadsheet and attached as a document to this strategy. Alternatively, you can use the Scorecard tool to track cash-flow changes on a month-by-month basis

Growth or Exit Strategy What is the preferred way for the business or team to grow? This could be through organic development, strategic partnerships or possible mergers and acquisitions. Alternatively, if withdrawal is being considered, how will this be achieved? For SME, what is the preferred way in which the current owners and shareholders will recoup their investment in the business? Form 2: Product and Services

Product Segments What is the natural grouping or segmentation for current and future products & services?

Top 3 Current Products What are the top 3 products or services in each product segment?



Top 3 New Product Ideas What are the top 3 new product or service ideas for development or sourcing over the next three years?

Competitors & Substitutes What are the main competitive or substitute products and services in each segment?

Status RAG Finally, what is the current status in each segment? Note: think about how competitive each product segment is and whether significant changes are required

Red = major concerns and immediate corrective action required

Amber = some concerns and future action is required

Green = performance is acceptable and no changes are required

Note: Red status items should result in the creation of improvement actions (which form part of the change programme) and Amber status items that reflect risks and need to be monitored closely.


Market Segments What is the natural grouping or segmentation for current and future customers & markets?

Top 3 Current Customers Who are the top 3 customers or markets in each market segment?

Top 3 Target Customers Who are the top 3 target customers and markets for conversion over the next three years?

Major Competition Who are the main competitors in each segment?

Action What actions should be planned in order to address concerns in each segment?


For each product-market what is the relative emphasis (H = High, M = Medium, L = Low and 0 = None) and status?

Red = major concerns and immediate corrective action is required

Amber = some concerns and needs to be monitored closely

Green = on-track and no change required

Blue = needs research

Black = not applicable


Financial forecasts What is the forecast income or budget trend (growth or decline) over the next three years?

Assumptions What are the critical assumptions that need to hold true in order for these forecasts to be achieved? Note: each assumption represents an area of risk and will need to be managed




Core Processes What are the core processes for your business or team? Note: this might reflect the TVT Core Process Model

Deliverable or Key Performance Indicator What is the main deliverable or Key Performance Indicator (KPI) for each core process? Reflect on how you will know if each is working

Status What is the current status of each core process?

Red = major concerns and immediate corrective action is required Amber = Some issues and needs to be monitored closely - represents areas of future risk Green = operating effectively and efficiently Black = not relevant to your business


Core Process Model What is a graphical model for you organisations that shows: 1) the core processes, and 2) how they link together? Note: keep it as simple as possible in order to make it understandable by all members of the team. It may be best simply to use the TVT core process model, and colour each element according to whether it is Red-Amber-Green status


Cornerstone What are the key roles within the business, and which member of the management team is responsible for

delivery in each area? Note: the term 'cornerstone' was introduced in the book 'The Beermat Entrepreneur'

Prime Responsibilities What are the prime responsibilities of each cornerstone?

Status What is the current status of each position?

Red = major concerns and immediate corrective action is required

Amber = some concerns and needs to be monitored closely

Green = right person with the right profile in the right role

Action What specific actions should be taken to address each Red status item?



Strategic Framework

Use the following blank template to address an issue or opportunity within your business or team


Statement of Strategic Intent

Industry Overview

Business Drivers

Purpose or Mission

Unique Capability

3 Year Vision

Funding Mechanism

Growth or Exit Strategy



Form 2: Product and Services

Product Segments Top 3 Current Products Top 3 New Product Ideas Competitors & Substitutes

P1

P2

P3

P4


Market Segments Top 3 Current Customers Top 3 Target Customers Major Competitors

M1

M2

M3

M4


Product-Market Matrix M1 M2 M3 M4

P1

P2

P3

P4


Current Year 1 Year 2 Year 3 Financial Assumptions

P1

P2

P3

P4




Core Process Deliverable or Key Performance Indicator Status Change Programme

People & Leadership

Industry Drivers

Strategy & Goals

Innovation & Change

NPD & Sourcing

Brands & Marketing

Sales Channels

Operations & Process

Finance & Cashflow

Business Governance




Core Process Model


Cornerstone Person Prime Responsibilities Status Change Programme

Documents

FTM Business Template - Strategic Framework