Choices and options
9.9 Choices and options
Gathering data and market intelligence is just the first stage in formulating a strategy. If we assume that strategic decisions are an iterative process, in as much as there is continual feedback from the market place or from within the business, then the strategic analysis and monitoring is constantly informing the choices and options that the business leaders make. Of course, at different times in a business lifecycle these can and will be fundamentally different. Shall we start a business? How shall we improve the business? How do we move into new markets? When should we close the business?
In the previous section, we looked at the tools you could apply to help gather and organise the data needed to make informed choices. Financial and accounting data offer quantifiable measures of the organisation’s performance. Year-end accounts tell how well the company did, manage- ment accounts tell how you’re doing, financial analysis tells how well you’re doing compared to others.
Management accounting data give company-specific information such as: 䊉 the balance sheet
䊉 profit and loss accounts 䊉 the worth of work in progress 䊉 the value of plant and machinery 䊉 the status of the cash flow 䊉 utilisation of resources 䊉 current bank balances 䊉 how often your staff are on chargeable projects 䊉 project budgets 䊉 the balance between fixed and variable costs 䊉 above the line and below the line costs.
Managing in the Media
These internal measures can then be used to assess the organisation’s performance on previous years, and the financial performance compared with competitors can be established from media market sector financial data.
In Chapters 8 and 9 we tried to give you some insights into the range of organisations that exist within the media industry and the individuals that the industry attracts. Notwithstanding any seemingly irrational behaviour about decision-making, how would we make sensible decisions from the data so far received? Many large organisations, especially international businesses, have whole departments dedicated to scenario planning and future planning – with, it must be admitted, varying degrees of success. Management texts are littered with case study analyses of these groups in action. So, how do you move from analysing the environment to making choices using the available data to substantiate and underpin the decisions you make? At this stage, there is a huge amount of data that needs to be filtered and evaluated.
The start-up business
How many times have you walked down the high street, looked at a new shop opening up and wondered, why on earth are they running that particular business in this particular location? It is fairly certain that in a shopping centre you know well you will have noticed that many shops open up, only to close down within 6 months to a year. Over 90 per cent of all start-up business fail within a few years. What was the ‘rational’ argument or case for starting this business? Who lent them the money? Why did they get funds to allow them to embark upon such a venture without due process taking place? Was it down to a plausible business plan presented to a local bank manager, or with monies from a retirement fund? Somewhere within a family or a group of associates, this foolhardy business adventure began. However, if all business analysis was predicated on the good offices of the company accountant, then nothing innovative would ever take place. Risk aversion is high on the accountant’s shopping list.
Look back at Chapters 7 and 8. The criticism of many entrepreneurs is that their filter can be a little bit ‘rose tinted’. This is what we might call the ‘high street shop’ view of business strategy – you only need to open the shop and put up a banner, and people will flock to buy the product.
Strategic management