How to Succeed in Business by Strategic Planning

Theodore Levitt, in his ground-breaking marketing book, Innovations in Marketing opens by stating: "The primary business of every business is to stay in business." (Levitt 1962 1) However, staying in business these days is more difficult than ever: competition, overhead, employee skills and finding the right customer mix. Planning must be tempered by strategy. There is no sense in building a skyscraper, unless you lay a good, solid foundation.

For the purposes of citing an industry and a business strategy example, we use the fashion industry. Because of its seasonaliity, uncertainty in terms of pricing and customer interest in a given style or color or even dress length as well as fabric selection, the fashion industry is a perfect example of the potential volatility of the business unless strategy comes into play.

In this particular case, this "primary" concept meant having to utilize Mintzberg's managerial roles which best fit the need for developing, maintaining, and then growing the business- a line of women's clothing aimed at the mature woman.

The beginning was an interpersonal managerial role of liaison (Mintzberg 2001 1) in order to gain information, facts and figures, and market trends from available literature and from contacts within the fashion industry. For example, one can look not only at the so-called "trendy" newspapers and magazines, including "Women's Wear Daily" and its companion, "W", but also a new magazine especially for women over 55, called "AGELESS". This is a rather new magazine, which provides a start-up potential with the exciting information that there is, indeed, a growing market for fashions for the mature woman, since there are more and more of them, as the graying of America grows. By reading an article in the current (May) issue, it is easy to see that the mature woman is not overlooked by fashion designers: "Four American Designers Define Style for Mature Women".

Given that the development of a clothing/fashion line for mature women has possibilities, one turns to Fayol's management function- beginning with "Planning- setting objectives, strategies, etc." (www.google/search 2001 1) Of course, it is simplistic merely to say that the objective is to earn a profit. Even in the best of circumstances, given start-up costs, a profit is unrealizable in the immediate future. Therefore, rather than use a scatter-shot means of creating a target market, one needs to refine and define the specific niche that this new company is aiming at. To merely create a basic line for just any mature woman is not ideal. So, given a growing market- it would seem that there are two specific niche markets: One for the elderly woman who may have limited mobility, or some slight disability which would require clothing easy to don and take off; the second market would be for the fashion-conscious, and still active mature woman- perhaps still working, even in a business of her own.

In researching these two markets, it is obvious (given the AGELESS article) that designers are involved and already developing a fashionable line of clothing for the more active woman. Little, it seems, has been created for the somewhat physically limited woman in terms of fashion and style. "The effect of the growing number of older Americans on the economy and the changing needs of the active senior citizens of the nineties is well documented...(but) the physical challenges of the normal aging process cannot be denied. Limited motion, wrinkled skin, changing posture and sagging muscles are inevitable." (Tondl 2001 1) There is a niche in that inevitability. And, that is the decision I have made: to capture a fashion sense for the mature woman who may have some limited mobility, but still wants a fashion-statement appearance. What is a little offsetting is a comment that "Most of the manufacturers who design clothes for those with special needs are generally driven by compassion rather than a profit motive." (Tondl 2001 1) This tends to indicate that the small manufacturers now serving that niche are doing it more or less as a sideline, rather than the main thrust of their production and design. This is part of Mintzberg's Informational managerial roles. So, the next logical step in organizing the potential of this market is to make some decisions, again, this is a Mintzberg managerial role- namely to "identify new ideas, and initiate...projects." (Mintsberg 2001 1)

There were two decisions to be made: First, the style and retail pricing of the line, and second, whether to sell them through a retail location or to add the expanse of the Web. It is obvious that, at the beginning, both are feasible: first, to find boutiques or fashion stores, in those regions where seniors live or move to. This would include states such as California, Florida, Arizona and New Mexico, as well as the growing opportunities in fast-growing Nevada.

To capture attention of retailers in those areas, I hired a designer, and contacted some other reputable and well-known designers who do not have their own retail outlets. They were asked about their interest in designing fashion women's clothing for mature women who might have some sort of physical impairment and could not always wear "regular" clothing. The initial designs would be (a) pants and jacket, (b) leisure and more formal dresses, and (c) blouses.

The decision was made to show initial designs with prices (an internet article spells out a fair retail price schedule). "Jackets at $179 and pants at $89." (Nellis 2001 1) There would be some additional price leaders at lower pricing. The line would be shown at regional trade fairs in Los Angeles, Las Vegas, and Miami or Tampa or Orlando.

Having taken orders (hopefully) the next step would be to contract out the design. There is a possibility that overseas or Mexican production firms would be the lowest cost locations. There is a need for making some early decisions- selecting fabric, color, shipment cost, and selecting a distribution center, or having the line shipped direct to retail locations. As the first of the line arrives at retail locations in the sunbelt, the next step would be to contact and interview distributors whose sales force would be able to inundate these markets, and could create new outlets.

The next decision would be to offer this line on the internet. The fact is obvious that many mature women, especially those with some physical mobility problems are apt to spend more time indoors, at home, and on the computer. It is a proper idea to advertise on a website which I entitle Comfort'N'Style. Statistics bear out the rapid growth of e-commerce. "Online retailing is emerging from the shakeout of 2000 with stronger consumer demand and improved profitability...the North American online retail market is expected to grow over 45 percent in 2001, reaching $65 billion." (Savage 2001 1) In other words, with very little expense (no rent, no clerks, no utility costs, etc.) setting up a website is an idea whose time has come, even to start-out companies such as this one.

Only after these initial decisions and contacts are made can one turn to immediate staffing needs and office location and equipment. Given that a decision to use distributors and their sales force would eliminate having to staff a separate sales force. So, the initial "home office" staff would include a secretary, accountant/assistant, part-time web designer and upgrader. Equipment would require an 800-phone line, fax, copier, and, of course, a computer with necessary software. In essence, until the business takes off, this can be run from one's home.

Based on Mintzberg's theories the development of this line and business are both entrepreneurial as well as an adhocracy, since there is basically one person (myself) in charge of decision making, forecasting, and controlling the income and outflow of money. He calls the proposed set up The Entrepreneurial Startup (the simple structure) "The simple structure is characterized, above all, by what is not elaborated. Typically, it has little or no technostructure, few support staffers, a loose division of labor, minimal differentiation among its units, and a small managerial hierarchy. Little of its behavior is formalized, and it makes minimal use of planning, training, and liaison devices." (Beshears 2001 5)

The fashion business is constantly on a teeter-totter. It is difficult, often, to judge from one year to the next whether a particular line will "take off" or not. Entrepreneurial decisions will therefore have to take the ephemeral inconsistencies of this particular industry. In order to be competitive, and ultimately profitable, from the very outset some alternatives need to be made and held in abeyance. In the instance of fashions for senior women citizens, the intention is to begin with a summery all-year-round line, since it will be originally intended for sunbelt consumers. The alternative would be to have designs, colors, and fabrics as well as production plants ready for winter wear, to expand the line to the Central, Northeast, Southeast, and Northwest areas. In addition, some thought will be given for accessories that are easy to put on and take off. There are many instances where women who suffer from arthritis have major difficulties in putting on necklaces, bracelets, and other fashion accessories. Special designs would be created and held in reserve until such a time when this addition to the fashion line would be feasible and potentially profitable.

Careful planning then requires careful, well-prepared execution, with contingencies firmly in place. The basis for success from the very outset is a thorough check-list, which begins with having the financial resources (a whole different essay!), credit established with the bank, and/or backers who are willing to be patient and not expect immediate returns. Here, then, is a proposed check-list, given managerial roles and entrepreneurial focus:

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- Decide and define a target market- perhaps a niche of a larger market which is underserved and growing.

- Decide on goods (in this case, fabric, color and style) that sets you apart from an competition and is of interest to the target market. Limit your first line to law- medium and upscale prices for leisure and formal wear.

- Try to obtain a gerontologist or AARP or some senior health group to recommend the type of clothing you are offering as easy for physically impaired women to wear. The idea here is not necessarily an endorsement of your label, but one of the type of clothing offered.

- Set up manufacturing facilities, or contract with those selected to be superior in manufacturing ability and distribution.

- Make final decisions about renting space at trade fairs in the SPECIFIC geographic regions for your first "push"

- Develop contacts for distributors/wholesalers/marketing organizations to "sell" your line.

- Set up a small staff and equipment, either in office or in home office.

- Make a decision about e-commerce: can you afford to manufacture in quantity and quality when and if orders come in. Also, set aside funds for creating web site and advertising.

As we try to strategize for the 21^st century, perhaps there is no more important aspect of growing and maintaining business than to look far more closely at what is known as -e-commerce. It can be substantiated that more and more consumers now use the internet to shop and buy. And, currently, the fear caused by the September 11 terrorist attacks, and now anthrax fears, all keep more and more people away from crowded shopping malls, and in the comparative safety of their homes, shopping by their personal computer. Do e-commerce strategies work?

Some success stories do stand out. The airline industry is using e-commerce for ticket-less travel. The innovator is the U.S.'s most successful airline, Southwest Airlines, which, in its financial report for the first quarter, 2001 (ending March 31) has booked over $500 million in ticket sales online. Thus, by the end of the year, Southwest expects well over $2 billion in revenue from the Internet, as most airlines now offer discounts for electronic ticketing. (www.southwest.com 1)

On the other hand there are the "well-known" e-commerce companies, such as Amazon.com, now the world's largest book retailer. The Amazon.com story is the keystone of e-commerce. "In a 1997 letter to shareholders, CEO Jeff Bezos wrote 'We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or Wall Street reactions,' and the company has done precisely that, building a company that will have an estimated $2.7 billion in sales this year. Investors have rewarded Amazon, giving it a valuation of twenty-three billion dollars." (Surowiecki 2000 38)

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To some extent, Amazon's growth has been com[pared to the early years of Wal-Mart. Amazon is in the midst of building and leasing giant distribution centers all over the country, and it will probably have "invested close to one hundred eighty million dollars in them by the time it's done, in 2001." (Surowiecki 2000 38)

The question remains (using our fashion industry example)- just because it works for one business, what are the strategies to make it work for ours? To enter the e-commerce business, there are three important strategies to consider. First, safety from intrusion by hackers to ensure privacy. The fact is that fraud takes hundreds of millions of dollars from consumers world-wide..

A second means of increasing consumer confidence is to improve customer service. Last Christmas there were a great number of complaints (e.toys was a major problem) because Christmas gifts ordered well in advance of the holidays never were sent. Online businesses, therefore, will have to rethink and redevelop their inventory and shipping procedures, and be ready for peak demand, especially around the holidays. This year, with all the anthrax scares, it is vital that orders be placed and shipped earlier than ever.

A third means of building confidence is perhaps the most simple: word of mouth. When one consumer, for example, gets what he asked for, on time, in good condition, and perhaps at a price lower than any local merchant might offer, he (or she) passes that good fortune on to friends, family, and neighbors. It becomes a sort of "pyramid scheme" of success.

The biggest barrier to e-commerce is lack of preparation by businesses and corporations world wide, "Doing business successfully in the Netted environment will be challenging, especially if business is conducted using old methods..." (Martin, 1997, p. 11) That means looking into the future today, and not a day too soon. "Ultimately, just about everything and everyone will be networked. Internet access will be everywhere, whether from a personal computer, a handheld organizer, a pager, or some other remote communications device." (Martin, 1997, p. 10)

A well; thought-out strategy now has to begin by realizing that consumer buying habits and patterns are changing. "A computer and a commitment to the science of retail are strategic necessities."(Trivers, 1996, p. 103) The advice is not merely to have a computer, but know how to use it strategically for marketing, reaching a customer base not previously accessible, and, spending some money to set up a web site and have it manned 24 hours a day, 7 days a week. In a sense, this replaces the formerly ubiquitous 800- numbers.

In other words, the major barrier to e-commerce is a lack of imagination, or a wait-and-see attitude. E-commerce is not something that will die and go away. It may be supplanted by more technically-expert systems to deliver messages and receive orders, or transmit data. E-commerce is a challenge for every business man and executive who fondly gazes at an improved bottom line.

It may be overly simplistic to say so, but, on the Internet, who knows how large or small one's business is. There is no store, squeezed between two buildings, no showcase, or curtained off back-room, with a single sales clerk. Business, large or small, has the entire internet at its disposal.

There may even be an e-commerce advantage for the small businessman- a 1:1 encounter with his customers. "If a firm is not in direct touch with its customers, then every single interaction is a priceless opportunity to learn more." (Peppers, 1997, p. 52) E-commerce, for example, can help a retailer track his customers. They do not become "lost" once they have left the store. "By tracking customers individually, interacting with them, and treating different customers differently...(one) can change the nature of competition entirely.." (Peppers, 1997 p. 53)

The timeliness of a discussion of strategy cannot be overlooked. The U.S. economy is now in a sharp decline. While there was already a slippage foreseen for the fourth quarter of 2001 and the first quarter of 2002, the terrorist attacks of September 11 escalated the drop. Even with the Fed's continuing to lower the interest rates (it dropped another half point the week of October 5) consumer confidence is at a decades-low. The well developed far-reaching strategies of most businesses have had to undergo some sharp revisions. Look at the magazine and newspaper and radio and TV advertising now: low, or no interest for several years...Special sales, especially at retailers like upscale Department stores who are being outsold by discounters. More and more e-commerce business because people are simply afraid to mingle in large crowds.

The businesses and industries that will survive without taking too much of a hit will be those who carefully planned some sort of "what if" strategy. Surely, no one expected terrorism. But, there must have been forward-looking firms that developed strategies for disaster- fire, earthquake, tornados, floods, etc. Those are the companies that will best survive this downturn of business and consumer confidence.

Given the unusual circumstances of present-day American businesses, one needs also to take a quick look at how strategies and leadership are meaningful and inter-related. Is there a signal to the rest of the American business world that Ford fired its CEO, Jac Nasser and replaced him with the latest generation of the Ford family? Are there going to be more mass exits of CEOs and CFOs, who were unable to create a cushion and, instead, saw their companies in a bottom-line free fall? In concluding this essay on st6rategy's being exclusively the outcome of plans and intentions, let us review what is expected of 21^st century leadership:

We often hear the phrase "He is a born leader". The fact remains that leadership is not something inherited, like a gene, but something that can be learned. "Leadership seems to be the marshalling of skills possessed by the majority but used by a minority." (Bemis 25) According to the author, there are four types of human handling skills. An overview of these four types gives us a good insight into how leadership can be achieved and successfully utilized.

The first skill is Attention Through Vision, which according to Bemis (1997) is focusing on results, and having an agenda that is fulfilled. The second skill defined is Meaning Through Communication. There is no doubt that effective leadership depends on the personality of the leader, which is exemplified in Bennis's next point: The Deployment of Self Through Positive Self-Regard. "Leadership is essentially human business." (Bennis 52) It is not computers, tools, or other less-than-human implements that create success.

Just as listening and communicating was part and parcel of the vision skill, a good leader has to be able to turn his dreams and ideas into realistic and significant words that his followers will understand, and having grasped them, become part of a team that gets the desired results.

One more point needs to be made about strategies and strategic management: namely, that recognition is not merely from the top down for a strategy that works. It is the recognition of what a company has to do in order to do more than survive. In the old days there was a distinct "win-lose" concept of the business world: "It is not enough to succeed. Others must fail." (Brandenberger p. 3) Today, that strategy is no longer accurate. Sometimes it may be necessary to adopt strategic partnerships, even with the competition. "Besides, there are few victors if business is conducted as war. The typical result of a price war is surrendered profit all around...(As Bernard Baruch said: You don't have to blow out the other fellow's candle to let your own shine." (Brandenberger p 4) While this can be thought-provoking for a company as a whole, it also defines the skills required from those involved in teamwork. "Organizations will not be able to meet and exceed customer expectations (or those of management and stockholders) unless and until all levels of the organization line up behind that common purpose." (Spector p. 20) How does that get accomplished? It is more than merely management by consensus. It is that participatory, teamwork application which pits capability and capacity against the needs of the current and future market. It becomes a need to focus on the ever-changing needs of the global customer, rather than responding to every change in price or concept of the competition. The responsiveness comes from the top, the delivery of the strategy comes from the bottom up.

To some, gathering a team for developing strategies tends to be an activity of predictions of what the future may hold. Actually, strategizing, or strategy-making, "must also be allowed to evolve in response to changes in the environment, and plans need to be modified accordingly." (Wall p 11) In other words, other than the Ten Commandments, nothing should be chiseled into stone. The way the world is changing in terms of technology, communication, consumer demand, mergers and acquisitions, adaptability and flexibility must be the key to creating not just the strategies of the company but the selection of those individuals who will form the team to get those strategies accomplished.

There will always be more questions than immediate answers. But you have to begin with the premise that you "first have to get people to know and believe in your product...enough to make them actively dissatisfied they don't have it." (Levitt 237)

CITATIONS:

Bennis, Warren and Nanus, Burt: (1997) "Leading Others, Managing Yourself" Leaders New York: HarperCollins Books

Beshears, Fred: (2001) "Mintzberg's Classification of Organizational Forms" ist_Socrates.Berkeley.edu/~fmb/articles/mintzberg/-16k

Brandenberger, Adam M. & Nalebuff, Barry: Co-opetition (19996) New York: Doubleday & Co.

Foyal, Henri: (1920) "Functions of Management" www.google.com

Levitt, Theodore: (1962) Innovations in Marketing New York: McGraw Hill Publishers

Martin, Chuck: The Digital Estate (1997) New York: McGraw Hill Publishing.

Martin, Chuck: Net Future (1999) New York: McGraw Hill Publishing

Mintzberg, Henry: (2001) "Mintzberg's 10 Managerial Roles" www.google.com/search?q=cashe

Nellis, Sherry: (2001)"Makeover for Older Women" www.about.com

Peppers, Don and Martha Rogers: Enterprise One on One (1997) New York: Doubleday & Co.

Savage, Melody: (2001) "Key Industry Trends for 2001" www.about.com

Spector, Bert A.: Taking Charge and Letting Go (1`995 New York: The Free Press

Surwiecki, James: "Have Amazon Critics Misread the Books?" New York: The NEW YORKER Magazine, April 10, 2000

Tondl, Rose Marie: "Older People: Where Should They Go for Clothes" Nebraska Cooperative Extension NF92-83

Trivers, Jonathan: One Stop Marketing (1996) New York: John Wiley & Son

Wall, Stephen J. & Wall, Sharon Rye (1995): The New Strategists New York: The Free Press

No author listed: Southwest Airlines website: www.southwest.com

No author listed: "Four American Designers Define Style for Mature Women" Ageless Magazine, May, 2001