Now that the new financial year has begun, we have closed off the previous period, submitted our budgets and perhaps are putting the finishing touches on our company annual report. Now it’s time to look ahead and plan our strategy for the next year. Is it the same as last year? Do we need to adjust our strategic direction? What has, or will change this year?
A crystal ball would be very helpful here, but that’s a little too easy isn’t it? Sort of. What we need to do is break down the various factors and look at them one by one. If we look at what is going to change, or what is likely to change, we have a better picture of what is in store for our organisation. From this we can develop our strategic plan.
There are 6 different areas that we need to consider when trying to determine what the future holds with respect to business. The following section discusses those areas and provides a couple of examples that will help you to understand and give you a framework to use in your planning.
The Political Environment – Lots going on here. The Greens have control of both houses and are influencing the policies and direction of the Government. Julia Gillard’s popularity is at record lows and some suggest that she will not take Labour to the next election. Ask yourself ‘what changes is the Government going to implement?’ Consider what the potential impacts of this current situation are for your business. Does this mean that your current activities are reinforced or will you need to make some changes?
The Economic Environment – This isn’t difficult either. If you’re tied in with the mining industry things are pretty rosy. But there is the MRRT and the carbon price. Outside the mining sector, things are a different story. Retail, manufacturing, construction and tourism are all really struggling. What is likely to happen with interest rates and the Aussie dollar? How will changes in these factors potentially impact your business? What do you need to do to ensure your targets and budgets will be met this year?
The Sociological Environment – Look at the trends that are happening in our society. We have an ageing population, the Baby Boomers will be starting to retire, we’re living longer and we’re becoming more multi-cultural. Does any of this have an effect on your thinking for the future of your business? If these things aren’t relevant, what factors are and what does this mean for your direction this year?
The Technological Environment – One that’s guaranteed to change quickly. Things that come to mind are cloud computing, the NBN and tablet computers. How are these technologies affecting your business? How can you take advantage of these technologies to improve your competitiveness? Could these technologies contribute to product or service obsolescence in your business? Have a close look at what products/services you are currently offering and how you conduct business activities. Does anything stand out?
The Environment – Global warming, natural disasters and pollution come immediately to mind. Outside of the carbon tax, ETS and flood levy, how could these issues affect your business? Are you in a flood prone area or, like me, based 7 metres below sea level? (I didn’t know this until I asked the question). How could the changes in our environment potentially impact your business or what opportunities are opened up because of this? I recently added an environment improvement program to my service portfolio, recognizing carbon pollution as a major issue. What could you do?
The Legal Environment – This year saw the introduction of the Australian Competition and Consumer Act which replaced the Trade Practices Act. What are the potential implications for your business? Then, there are the legal responsibilities of Directors which seem to change every day. Look closely at your plan of attack and make sure you’re adapting to changes in the legal environment.
So, there’s the framework for monitoring the external environment. When broken down into the various areas, you can focus on potential changes and impacts to your business without getting confused or dominated by the topical issues. Use the information from scanning the external environment to put together your strategic plan for this financial year. And don’t forget to consider your competitive strategy and portfolio analysis.
SOM Consulting are experts in strategy. For more information or assistance with developing your strategy, contact us at enquiries@somconsulting.com.au
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