Wednesday, 03 January 2007 22:25
Strategy Plan for Aftersales Services
Activities of each company, which makes great success on aftersales services, are constructed on a stable and strong business model. “Business model” is not a same concept with “strategy” even if many people use both concepts for the same meaning. The game of the rule in business life is to ensure a higher R.O.C.E (return on capital employed) than C.O.C (cost of capital), in other words (R.O.C.E >= C.O.C) equation. Business model defines business performance system of a company, in other words the fact how the company integrates various and different business components. But, business model does not contain competition multiplier, which is so crucial for the company. Since the company shall meet and compete with its competitors sooner or later, some specific precautions shall be taken regarding competition. Strategic planning consists of all aforementioned precautions regarding competition and the methods concerning the execution of those precautions.
Competition strategy expresses how the company can perform better works than their competitors. Company can have a better performance when it is different from rivals. For this reason, it is essential to focus on strategies including methods not to be applied by competitors and develop non-imitable competences. Companies can not achieve superiority on competitors or get different results in case of supplying similar products and services by means of similar sales methods. The prices shall fall down due to firmer competition and customers shall have more profit under such circumstances.
The strategy to achieve superiority on rivals and make a difference should comply with company resources, environmental conditions and basic targets. Internal resources (e.g. IT infrastructure) and competences (e.g. logistics operations) of company should be improved and transformed in order to comply with the external business environment during strategy formation process. Internal and external base-case (environmental status) analysis shall be performed both within micro and macro levels while determination of stragety formulation. After base-case (status analysis) is performed, targets shall be determined in compliance with said analysis. Finally, a stragetic plan shall be introduced in parallel to status analysis as a result of determined targets. Strategic plan should contain the details of steps to be taken in order to reach determined targets. In simplier words, strategy formulation should express where the company is, where the company would like to go and how to go.
Companies shall usually choose one of the following four different strategy models shown in the following table according to the conditions of the market they have been acting, base-case (status) analysis and determined targets.
Five Force model of Michael Porter is recently applied for automotive industry’s aftersales service issues. Automotive companies, which operates under more stable, steady and strong market conditions than other industries, shall aim to get maximum profit from their aftersales operations.
Selection of aftersales field of activity defines the field where company should focus on. Field of activity is a kind of battlefield where the company meets his rivals. First of all, the field of activity to be selected shall be attractive materially and it should also be compatible with the resources and competences of the company. Selection of field of activity is a really very critical process. The questions of what to sell, where to sell, whom to sell and how to sell should be replied. To use the following template shall simplify the process for this purpose.
The strategic plans, which are created by following the methods described above, must be accepted and applied by company employees in order to be successful within the battlefield (market). Many strategy plans, which were prepared perfectly, shall remain as a plan and cant be successful in practice. One of the basic reasons of this failure is destruction of energy, power, desire and passion rapidly, which were introduced while creating strategy plan, by daily operational procedures.
The organisation and the members of organisation, as a whole, by means of a proactive approach, tend to the works which they think to give reaction or intervene immediately instead of implementing new strategy plan. The following seven points should be executed carefully in order to make the stragetic plan acceptable by every member within the organisation and to fill the gap between the theory and practice of plan:
- Strategic plan shall be created simply but also tangibly.
- Not performance targets but the ways of reaching performance targets shall be discussed.
- Communication infra-structure shall be established in order to discuss market trends and possible developments, thus, all company employees shall speak the same language.
- Sourcing planning shall be discussed initially.
- Priorities shall be determined clearly.
- Results shall be permanently followed and monitored.
- Implementation capacity and competence shall be improved within the company, succesfull applications shall be awarded.
As a result of this; the company, which wants to increase its value with aftersales services, shall implement strategic planning in order to apply its determined business model, dominate his competitors and create more R.O.C.E than his capital cost. The company, which aims to create added values to all shareholders and partners by providing constant dominances, must select its strategic model, determine its field of activity and remove the difference between the plan and practice while implementing the strategy plan with the support of employees.
References
Hüseyin Leblebici. Management,Business Models and Value Creation
Tuğrul Atamer & Philip Riot. Strategy-Key Concepts And Different Perspectives
Michael C.Mankis & Richard Steele. Turning Great strategy into Great Performance-HBR
Joan Magretta. Why Business Models Matter-HBR
Strategic Management-Wikipedia,The Free Encyclopedia , http://en.wikipedia.org/wiki/Business_strategy
Strategy Realisation Essential Elements, Businessballs.com, http://www.businessballs.com/businessstrategyimplementation.htm
