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1、www.myCNI.com.mywww.OOBEY.com STRATEGIC PLANNING AND BUDGETING Part 1:Business Model and StrategyCase Study,Concepts and Debatable IdeasKenny OngCNI Holdings Berhadwww.myCNI.com.mywww.OOBEY.com Intro:CNI1.20 years old2.Core Business:MLM3.Others:Contract Manufacturing,Export/Trading,eCommerce4.Malays
2、ia,Singapore,Brunei,Indonesia,India,China,Hong Kong,Philippines,Italy,Taiwan,Oman,United States,Vietnam5.Staff force:5006.Distributors:200,0007.Products:Consumer Goods and Serviceswww.myCNI.com.mywww.OOBEY.com History of Strategic Planning and Budgetingwww.myCNI.com.mywww.OOBEY.com Planning in the“o
3、ld”days1.Budget top down no questions asked2.Only two budget goals revenue,expenses3.The only planning we needed to do was“do better than last year”4.Planning was bottom up -compilation of plans within set budget5.No one knew what the other was planning6.Accountings role was only to compile budget f
4、or approval7.KPIs were not used8.Sales was resource priority,everything else not important9.Assumed no major changes in market10.R&D was bottom upwww.myCNI.com.mywww.OOBEY.com Problems from the startwww.myCNI.com.mywww.OOBEY.com Problems from the start(1/2)1.No money2.Split Objectives:Sales?Share Pr
5、ice?Image?3.Independent entities4.Accounts controlling schedule5.S&M always running over budget6.Compounding activities 7.BOD expectations too high without proper explanation nor justification8.Lack of Market research9.Expenses not spent gets punishedwww.myCNI.com.mywww.OOBEY.com Problems from the s
6、tart(2/2)10.Budgeting for known,consistent,and predictable business conditions11.Never learn from past mistakes,usually in under-budgeting(e.g.staff and PCs)12.Wrong Business Model blame Budgeting&Planning.Having a good planning process cannot correct a bad business model13.Focusing on the Process(K
7、PIs),instead of“Business”14.Planning&budgeting treated as separate processes by businesses/functions www.myCNI.com.mywww.OOBEY.com Todays Agendawww.myCNI.com.mywww.OOBEY.com Summary:Planning&BudgetingLong-term PlansObjectivesStrategiesEnablersResourcesAlso known as L.O.S.E.R.www.myCNI.com.mywww.OOBE
8、Y.com Summary:Todays presentation1.Business Model2.Strategy3.Alignment4.Resourceswww.myCNI.com.mywww.OOBEY.com Assumptions 1:Audience1.Business2.Government3.Non-profitwww.myCNI.com.mywww.OOBEY.com Assumptions 2:Starting Point1.Wanting to start proper planning&budgeting process,or2.Wanting to improve
9、 planning&budgeting processwww.myCNI.com.mywww.OOBEY.com 1.Get the right Business Model firstwww.myCNI.com.mywww.OOBEY.com How to fail without trying1.Wrong Business Modelwww.myCNI.com.mywww.OOBEY.com The Roadmap to Failure Fred Wiersema and Mike TreacyPerformanceTimeClear SailingTodays performanceA
10、d-hoc TacticsDenial&DefenseDoom ProjectionsOverdue FailureThe Moment of TruthXPerformance FreefallTomorrows actual performanceDownpresure of Unclear Strategywww.myCNI.com.mywww.OOBEY.com Denial and Defense“Its not really good value our competitor is offering,because it doesnt include a lot of our fe
11、atures.”-ABC vs Air Asia“Its good value but not in our preferred customer market.”-ABC vs Toyota“Sure theyre hurting us,but with their unfair advantage,what can we do?”ABC vs MILO“The rules we are playing by have always worked before”AMEX vs VISAwww.myCNI.com.mywww.OOBEY.com The Roadmap to Failure F
12、red Wiersema and Mike TreacyPerformanceTimeClear SailingTodays performanceAd-hoc TacticsDenial&DefenseDoom ProjectionsOverdue FailureThe Moment of TruthXPerformance FreefallTomorrows actual performanceDownpresure of Unclear Strategywww.myCNI.com.mywww.OOBEY.com Ad Hoc TacticsSelectively hold discoun
13、ts to hold business that has started to go elsewhereIntroduce new promotions,terms,conditions,and offers to confuse and cloud the marketBeef up customer service by adding people to fix mess-ups and quicken delayed shipmentsDelay capital investments and adjust accounting methods to portray quarterly
14、financial results more favorablyIntroduce“new and improved”products that are new in form,but not in substantive ways that are of consequence to purchasersIntroduce Balanced Scorecards and Performance Management Systemswww.myCNI.com.mywww.OOBEY.com The Roadmap to Failure Fred Wiersema and Mike Treacy
15、PerformanceTimeClear SailingTodays performanceAd-hoc TacticsDenial&DefenseDoom ProjectionsOverdue FailureThe Moment of TruthXPerformance FreefallTomorrows actual performanceDownpresure of Unclear Strategywww.myCNI.com.mywww.OOBEY.com“What is the moral of the story?”www.myCNI.com.mywww.OOBEY.com What
16、 is the Business Model?USPMarket DisciplineProfit Modelwww.myCNI.com.mywww.OOBEY.com Intro:Market DisciplineMamak stallwww.myCNI.com.mywww.OOBEY.com Intro:Market DisciplineThey are the most innovativeConstantly renewing and creativeAlways on the leading edgeA great deal!Excellent/attractive priceMin
17、imal acquisition cost and hassleLowest overall cost of ownershipA no-hassles firmConvenience and speedReliable product and serviceExactly what I needCustomized productsPersonalized communicationsTheyre very responsivePreferential service and flexibilityRecommends what I needIm very loyal to themHelp
18、s us to be a successProduct LeadershipOperationalExcellenceCustomerIntimacywww.myCNI.com.mywww.OOBEY.com Operational Excellence(low cost producer)Ref:The Discipline of Market Leaders,Michael Treacy&Fred Wiersema;1995Product Leadership(best product)Customer Intimacy(best total solution)Strategy:Value
19、 Disciplineswww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Operational ExcellenceCompetitive priceError free,reliableFast(on demand)SimpleResponsiveConsistent information for allTransactionalOnce and DoneCustomer IntimacyManagement by FactEasy to do business withHave it your way(customi
20、zation)Market segments of oneProactive,flexibleRelationship and consultative sellingCross sellingProduct LeadershipNew,state of the art products or servicesRisk takersMeet volatile customer needsFast concept-to-counterNever satisfied-obsolete own and competitors productsLearning organizationStrategy
21、:Value Disciplineswww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com The McPlaybook*Make it easy to eat50%drive-thruMeals held in one handMake it easy to prepareHigh TurnoverTasks simple to learn&repeatMake it quick“Fast Food”Tests new products for Cooking TimesMake what customers wantProwl
22、s market for new productsMonitored field tests*Adapted from:Businessweek,Februrary 5th 2007www.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Operational Excellence(low cost producer)Ref:The Discipline of Market Leaders,Michael Treacy&Fred Wiersema;1995Product Leadership(best product)Custom
23、er Intimacy(best total solution)Strategy:Value Disciplineswww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Operational Excellence(low cost producer)Ref:The Discipline of Market Leaders,Michael Treacy&Fred Wiersema;1995Product Leadership(best product)Customer Intimacy(best total solution)S
24、trategy:Value Disciplineswww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Intro:Market Discipline*Treacy&Wiersema,The Discipline of Market Leaders,1995Product/Service AttributesRelationshipImagewww.myCNI.com.mywww.OOBEY.com Intro:Market Discipline*Treacy&Wiersema,The Discipline of Market
25、Leaders,1995Product/Service AttributesPriceQualityTimeSelectionSmart ShopperRelationshipImageOperational Excellence:Quality and selection in key categories with unbeatable priceswww.myCNI.com.mywww.OOBEY.com Intro:Market Discipline*Treacy&Wiersema,The Discipline of Market Leaders,1995Product/Service
26、 AttributesBrandTimeFunctionBest ProductRelationshipImageProduct Leadership:Unique products and services that push the standardswww.myCNI.com.mywww.OOBEY.com Intro:Market Discipline*Treacy&Wiersema,The Discipline of Market Leaders,1995Product/Service AttributesServiceTrusted BrandRelationshipImageCu
27、stomer Intimacy:Personal service tailored to produce results for customer and build long-term relationshipsRelationswww.myCNI.com.mywww.OOBEY.com Operational Excellence(low cost producer)Ref:The Discipline of Market Leaders,Michael Treacy&Fred Wiersema;1995Product Leadership(best product)Customer In
28、timacy(best total solution)Strategy:Disciplineswww.myCNI.com.mywww.OOBEY.com Summary:Todays presentation1.Business Model Done2.Strategy3.Alignment4.Resourceswww.myCNI.com.mywww.OOBEY.com 2.Set the StrategiesHope is not a strategywww.myCNI.com.mywww.OOBEY.com What is Strategic Planning?Strategic Plan
29、ningVariables:ResearchGrowthRisksStakeholdersConstraintsSWOTMisc.Output:PlansPrioritiesKPIswww.myCNI.com.mywww.OOBEY.com Before we startWhich comes first?1.Strategies-KPI?2.KPI-Strategies?www.myCNI.com.mywww.OOBEY.com Step 1:Analysis1.SWOT2.PESTEL3.Scenario Analysiswww.myCNI.com.mywww.OOBEY.com SWOT
30、:Opportunities&ThreatsOpportunities=Taking advantage of TrendsThreats=Strategic Risk Managementwww.myCNI.com.mywww.OOBEY.com Downturn Trends?www.myCNI.com.mywww.OOBEY.com Downturn Trends?www.myCNI.com.mywww.OOBEY.com Downturn Trends?www.myCNI.com.mywww.OOBEY.com Downturn Trends?www.myCNI.com.mywww.O
31、OBEY.com SWOT:General Strategic Risks1.Industry1.Margin Squeeze2.Rising R&D/CAPEX3.Overcapacity4.Commoditization5.Deregulation6.Increased power among suppliers7.Extreme business-cycle volatility2.Technology1.Shift in technology2.Patent expiration3.Process becomes obsolete3.Brand1.Erosion2.Collapse1.
32、Competitor1.Emerging global rivals2.Gradual market-share gainer3.One-of-a-kind competitor2.Customer1.Customer priority shift2.Increasing customer power3.Over reliance on a few customersProjectR&D failureIT failureBusiness development failureMerger or acquisition failureStagnationFlat or declining vo
33、lumeVolume up,price downWeak pipelineAdrian J.Slywotzky and John Drzikwww.myCNI.com.mywww.OOBEY.com PESTEL and ScenariosScenario 1Scenario 2Scenario 3PoliticalEconomicSocialTechnologyEnvironmentLegalwww.myCNI.com.mywww.OOBEY.com Business Situation vs.FocusUpturnFlatDownturnFight ComplacencySharpen E
34、dgeKeep MomentumConquerChange mgmtReduce FatContinuityEveryone HappyInnovationAcquireProfitsBuild momentumSalesCash FlowTalent MgmtInnovation/R&DEarly winsSlow Down HR CostsTop Talent focusSales,Sales,SalesIncrease attritionwww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Business Situati
35、ons vs.FocusUpturnFlatDownturnFight ComplacencySharpen EdgeKeep MomentumConquerChange mgmtReduce FatContinuityEveryone HappyInnovationAcquireProfitsBuild momentumSalesCash FlowTalent MgmtStack R&DEarly winsSlow Down HR CostsTop Talent focusStack SalesIncrease attritionMany times,you need a different
36、 CEO/Leader/Management Team for each business situationwww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Step 2:What is your Goal?1.Cost Reduction2.Growthwww.myCNI.com.mywww.OOBEY.com Strategies for Growth1.Base Retention2.Share Gain3.Positioning4.Adjacent Market5.New BusinessGROWTH“Double
37、-Digit Growth”,Michael Treacywww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com GrowthExpansion1.Consolidate2.Geographic3.Distribution4.CompensateTransformative1.Portfolio refocus2.DiversificationEasierTougherwww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Growth thru ExpansionE
38、xpansion1.Consolidate2.Geographic3.Distribution4.Compensate1.Gain Scale to compete2.Integrated Solutions3.Financial Growth4.Supply(security,mix)5.Developing markets6.High cost of Extra Capacity7.Private Equity8.Expanding Sovereign Fundswww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Grow
39、th thru ExpansionExpansion1.Consolidate2.Geographic3.Distribution4.Compensate9.De-regularization10.Demand outstrip supply11.Revenue Mix Tax optimization12.Talent13.New,Low-cost Entrants14.Undervalued Big Players15.Newer Assetswww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Transformative
40、 GrowthTransformative1.Portfolio refocus2.Diversification1.New Business Lines2.Selling/Spin-off non-core3.Increase product line4.New customers5.New technologies*6.Complementary Business7.Up-down Supply Chain8.Patent9.Convergence anticipationwww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com
41、 Cross Sector TransformationTraditionalAlternativeIncrementalwww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Cross Sector TransformationTraditional UtilityAlternativeEnergyIncrementalTechnologyNew Delivery,New Sources,Existing ResourcesOil,Gas,Electricity,CoalBiomass,Nuclear,Ethanol,Wind
42、,Solarwww.myCNI.com.mywww.OOBEY.com Example:Energy Sectorwww.myCNI.com.mywww.OOBEY.com Step 3:Strategy1.Base Retention2.Share Gain3.Positioning4.Adjacent Market5.New BusinessGROWTH“Double-Digit Growth”,Michael Treacywww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com How Markets determine Gr
43、owth Strategies(1)Growth RateGrowth RateStrategyWhy?Fast1.Market Positioning2.Share Gain3.Base RetentionMaintain market share in strategic segmentsPrepare for market declineCompetitors focus too much on getting new customersFlat1.Base Retention2.Share Gain(Acquisitions)Lose customers slower than com
44、petitorsCreate scale economics,squeeze costswww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Churn RateChurn RateStrategyWhy?Low1.Share Gain(Acquisitions)2.Adjacent MarketsBuying customer base is cheaper than own effortsNew products,old customers strategyHigh1.Base Retention2.Share Gain 3
45、.Adjacent MarketLose customers slower than competitorsCustomers are always open to the best value and offerDesperate to gain revenueHow Markets determine Growth Strategies(2)www.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com How Markets determine Growth Strategies(3)Fast Growth,Low Churn1.M
46、arket Positioning2.Share Gain(M&A)3.Base Retention4.Adjacent Markets(M&A)Example:XYZ Sectorwww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Create better Value propositionNeutralize competitor advantagesBuy Market Share outrightPrice PremiumOperating ModelIntegrationStrategy 2:Share Gainwww.myCNI.com.mywww.OOBEY.com www.myCNI.com.mywww.OOBEY.com Buying Market Share:Acquisition strategyIntegrationOperatingModelPricePremiumBuying Market ShareNet Cost per Customer stand alonewww.myCNI.com.mywww.OOBEY.com Thank You.soft copy of slides: