Express & Star

Why good strategy always matters

David Cameron's announcement on Monday, November 17, about an impending world recession will frighten many local businesses who are only just recovering from the last one.

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For the first part of 2014 we saw the performance of Black Country businesses increase significantly in terms of UK and export sales. However the largest private business survey conducted by the British Chambers of Commerce showed in the last quarter that export sales and orders have collapsed for local manufacturers.

Many businesses are sceptical about exporting: Differences in language, customs, and business practice often appear insurmountable. Nevertheless, help is available in many guises: UK Trade & Investment, The Black Country Export Expert programme, and the new Business is Great Britain website www.greatbusiness.gov.uk can tell you all you need to know to get started.

However, not all businesses will want to export and many will be less inclined at this time: Growth in Europe appears to have flat lined, and even in China growth has slowed considerably. Africa is in turmoil because of the Ebola crisis; the sanctions against Russia over Ukraine are biting many of our businesses, and the prolonged instability in the Middle East is not helping matters.

Nevertheless, finding new markets for existing products is a well-tested business growth strategy. If we characterise Black Country manufacturing as producing high quality goods, with low production volumes, able to turn around products rapidly and delivering into niche markets, perhaps the UK is the best source of customers. After all, component suppliers high up in the 'food chain' are very good at tracking down businesses who can turn around finished products very quickly and once they have found you, they are likely to use you again and again.

However such an approach may be self-limiting for our local businesses: Having to rely on repeat business with very tight deadlines and diminishing margins. Today you can just as easily let a potential customer in China know what you can do to help them, as you can for a company located in the UK. Globalised marketing using the internet certainly widens the scope in terms of how customers can find you. With the entire world of component suppliers at your finger tips, it all comes down to making an active choice about what you want your business to do and who you want as your customers.

It sounds simple but this is the essence of strategy: Choosing what you want to do and don't want to do. Who and where your customers are, and which potential customers you are not going to serve.

Unfortunately many businesses prefer to muddle along for as long as they can. Or if they do make a choice as to which markets they will serve, they never test whether that choice remains appropriate as the world changes around them and competitors appear out of nowhere. Making good choices and then acting on them often seems to be much harder than it should be. If you have the right people around you to help make those choices then you already have a competitive advantage. Can you imagine continually having to make crucial businesses decisions on your own? No wonder they say that 33 per cent of chief executives are clinically depressed.

Strategy is about making defensible choices. Choosing to export and fully understanding the risks and rewards, and getting specialist advice to back up your choice, is the right thing to do if export markets are the ones you want your business to serve.

Having a circle of critical friends around you to help you make those defensible choices is probably the best thing any business owner or leader can do. It may mean collaborating with other businesses which do a similar thing to you. It may mean going to networking events and learning what other people are doing. Whatever you choose to do and whatever markets you choose to serve, ensure that it is a well thought out and defensible strategy that is driving your business, and not 'pot-luck' dependent on fickle customers.

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