Sohar University, Faculty of Business

L3/S1 (2022-2023)
BUBS3401 Small Business Management

Developing Strategic Plan

1. Step 1: Develop a Clear Vision and Translate It into a Meaningful Mission Statement
a. Vision statement
b. Mission statement
c. Goals: broad, long-range attributes that a business seeks to accomplish; they tend to be
general and sometimes abstract.
d. Objectives: more specific targets of performance, commonly addressing areas such as
profitability, productivity, growth, and other key
2. Step 2: Assess the Company’s Strengths and Weaknesses
a. Strengths: positive internal factors that a company can use to accomplish its mission,
goals, and objectives
b. Weaknesses: negative internal factors that inhibit the accomplishment of a company’s
mission, goals, and objectives.
3. Step 3. Scan the Environment for Significant Opportunities and Threats Facing the Business
a. Opportunities: positive external options that a company can exploit to accomplish is
mission, goals, and objectives.

Identifying Company Strengths and Weaknesses

Strengths (Positive Internal Factors) Weaknesses (Negative Internal Factors)

b. Threats: negative external forces that inhibit a company’s ability to achieve its mission,
goals, and objectives.

Identifying and Managing Threats

Severity (1 = Probability of Threat Rating

Specific
Source Low, 10 = Occurrence (0 (Severity ×
Threat
High) to 1) Probability, Max = 10)
1. Channels of distribution ?
2. Competition ?
3. Demographic changes ?
4. Globalization ?
5. Innovation ?
 4. Step 4. Identify the Key Factors for Success in the Business: key success factors the factors that
determine a company’s ability to compete successfully in an industry

Identifying Key Success Factors: a sample

Key Success Factor (KSFs) How Your Company Rates

1. Experience in the industry Low 1 2 3 4 5 6 7 8 9 10 High
2. Sufficient start-up capital Low 1 2 3 4 5 6 7 8 9 10 High
3. Tight cost control (labor costs, 15 to 18 percent of Low 1 2 3 4 5 6 7 8 9 10 High
sales, and food costs, 35 to 40 percent of sales)
4. Accurate sales forecasting, which minimizes wasted Low 1 2 3 4 5 6 7 8 9 10 High
food
5. Proper inventory control Low 1 2 3 4 5 6 7 8 9 10 High
6. Meticulous cash management Low 1 2 3 4 5 6 7 8 9 10 High
7. Choosing locations that maximize customer Low 1 2 3 4 5 6 7 8 9 10 High
convenience
8. Cleanliness Low 1 2 3 4 5 6 7 8 9 10 High
9. High food quality Low 1 2 3 4 5 6 7 8 9 10 High
10. Friendly and attentive service from a well-trained wait Low 1 2 3 4 5 6 7 8 9 10 High
staff
11. Consistency in quality and service over time Low 1 2 3 4 5 6 7 8 9 10 High
12. Speed, particularly at lunch, when the restaurant Low 1 2 3 4 5 6 7 8 9 10 High
attracts businesspeople who must dine quickly and get
back to work
13. A clear definition of the restaurant’s distinctive Low 1 2 3 4 5 6 7 8 9 10 High
concept—its food, decor, service, and ambiance

5. Step 5: Analyze the Competition

a. Competitive Profile Matrix a tool that allows business owners to evaluate their
companies against major competitors using the key success factors for that market
segment

Sample Competitive Profile Matrix

Your Business Competitor 1 Competitor 2

Key Success
Weight Weighted Weighted Weighted
Factors Rating Rating Rating
Score Score Score
Quality
Customer
retention
Location
Perception of
value
Cost control
Total
6. Step 6. Formulate Strategic Options and Select the Appropriate Strategies
a. Strategy: a road map of the actions an entrepreneur draws up to fulfill the company’s
mission, goals, and objectives.
b. Cost leadership strategy: a strategy in which a company strives to be the low cost
producer relative to its competitors in the industry.
c. Differentiation strategy: a strategy in which a company seeks to build customer loyalty
by positioning its goods or services in a unique or different fashion.
d. Focus strategy a strategy: in which a company selects one or more market segments;
identifies customers’ special needs, wants, and interests; and approaches them with a
good or service designed to excel in meeting those needs, wants, and interests