Lost? You Need a Road Map by By Joel Prather If the truth were known, very few job- bers and WDs plan very far in advance. Most run their business by the seat of their pants, making decisions on the spur of the moment and guiding their compa- nies as if they were a ship in a storm. Many have been quite successful at this, even though such constant changes may take their toll on the sanity of a manager. It was much easier in the old days, when the market was more stable. Today with fast changing trends, increasing parts proliferation, mergers and acquisitions and long-time distributors going out of business, few executives can afford not to plan. A well thought out and adaptable plan may be the key to success for after- market executives. Strategy is defined as a unified, comprehensive and integrated plan that relates a firm’s strengths to the challenges it faces in its business envi- ronment. Strategic management is a process by which all planning is done in a coordinated effort, taking into account all variables that affects the business. Once the process is complete, the plan is reviewed on a periodic basis, changed if needed and communicated to the firm’s employees. When used, management will get a clear picture of the firm’s overall goals and objectives. The manager and _ his employees will not waste a lot of time, effort and money chasing ideas that are not consistent with the firm’s objectives. This topic may sound familiar. There have been previous articles in this col- umn on specific areas of management such as marketing, finance and reward systems. Here we are discussing the company’s overall goals. Know your business The first thing a firm should address is its position in the marketplace. In which area of the aftermarket does the business operate? What is its market niche? Where is the firm the most com- petitive? Least competitive? What are the firm’s strong and weak points? Where do you want to be next year? Five years from now? Ten years? These and other questions must be answered before real strategic planning can be started. Management must know where the firm is headed and how it rates in the market. You might be think- ing, “This is ridiculous! I know what I am doing! I’m in the auto parts busi- ness!” That may be true, but which area? Are you primarily in brakes? Engine parts? Do you have service bays or a machine shop? Do you specialize in marine parts or PBE products? Who is your major competitor? Why is he bet- ter than or not as good as you are? What are his strengths and weaknesses? Knowing the answers will force the executive to examine his niche. It is so easy to chase several markets at one time, only to find you’ ve spent so much time and effort to be “everything to everybody” that there are no profits left. Inventories and manpower might have to be increased dramatically just to gain some business in an area where the firm is already weak. While the firm is chas- ing this new business, old business may be going to your competitors. Internal factors Once you have determined where you think you are and where you want to be, determine the feasibility of your goals. Do you have the resources to make changes? What are the costs of carrying out plans to go after a new mar- ket segment? Will it be profitable, or will the firm just dilute its resources? Be sure to consider the strong points of the firm rather than concentrating on the negative aspects. It is natural to want to eliminate the problems that exist in the business, but a good manager can use the firm’s good points to his advantage. A strong inventory, fast turnaround time, a knowledgeable sales force and strategic location are examples of good points to consider when making plans. These may weigh heavily against the competition. Most of us think in terms of business growth. Practically all information you will normally see or hear will concern growth in business. There are times when growth is not a viable strategy to consider. There are, in fact, four general strategies to consider: expansion, stabil- ity, retrenchment and combination strategies. A strategy involving expansion is obviously the most popular. All com- panies desire growth, and growth is usually achieved through expansion. An expansion strategy is normally considered when a company believes that it can offer more goods or servic- es than now exist in the market. This might involve adding new product lines or services, more inventory depth, going after new customers or adding new stores. It might also involve integrating part of the distribu- tion system, such as warehouses purchasing jobber stores or jobbers adding service bays. Expansion strate- gies usually carry more risk than the other strategies. Stability sounds like it is a non- growth strategy, but this is not necessar- ily true. Stability strategies are pursued when a firm seeks to continue to offer the same services it has in the past or when the firm’s decisions focus on improving functional perfor