|
| Thursday, March 29, 2007 |
| 4. Effect not Equal to Cause when Planning Strategy |
When reviewing a business it is essential to cut through the symptoms of problems and reach the underlying causes. Questions which can assist in revealing the real causes include the following:
* "What stopped the business from?"
* "What caused the cause of?"
* "Why didn't the business achieve a 25% return?"
By way of an example consider why this company may be unable to increase its market share:
Because it cannot penetrate major customers because its product range is too narrow because the company doesn't have the capability to produce additional products because of shortcomings in R & D because of a lack of expertise and resource because R & D is not an immediate priority because of a lack of profits because of a high interest burden because the company is over-reliant on borrowings because the shareholders won't/can't raise additional permanent capital.
The moral in this case is that there are no major customers due to under-capitalization !
Also have a look at the discussion on causes of business failure in Devising Business Strategies. |
posted by azwan.fatahsz @ 2:16 AM  |
|
|
|
