Why Business Conduction in the U.S. Requires a Strategic Approach

 The value made for each stakeholder is shown by the difference between each part. The goal of a business plan is to make these gaps bigger so that the company can make more money.

Getting Customers More Happy

This is the difference between what the customer wants to buy and the price. It's called customer joy. Customers get value from a business plan that either raises their WTP or lowers the price of its goods or services. Customers get more value when there is a big difference between the two. As part of its marketing plan, a business might try to raise WTP. By finding ways to raise the WTP of target customers, good market research can help a business decide how to set its prices. For instance, a company could set itself apart and get customers to stick with it by making ecology a part of its business plan. By making sure its values are the same as those of its target audience, a business can effectively improve consumers' WTP. Increasing the firm's margin The difference between how much a thing costs to make and how much it sells for is its value. This difference is called the firm's margin, and it shows how well the plan worked financially. Return on invested capital (ROIC) is one way to measure this difference. This metric looks at how much working income a business has compared to how much capital it needs to make that income. Here's how to figure out ROIC:

Net Operating Cost After Tax (NOCAT) / Invested Capital (IC) is the return on capital that was put in.

ROIC shows buyers how well a business is at making money from its investments. By raising WTP, a business may have to raise prices, which will increase its firm profit. Cost cuts are another way for business leaders to raise this measure. For instance, sustainability projects can lower production costs by using fewer or more sustainable resources, in addition to improving WTP. By focusing on the triple bottom line, a business can make more money and make customers happier at the same time.

Increasing Employee Satisfaction and Supplier Surplus

A company can give suppliers value, or seller surplus, by lowering their WTS or raising costs. Since it's not possible to keep prices high, a good business strategy tries to create value for suppliers by lowering WTS. Each company does this in their own unique way. For instance, a storefront business might work with vendors to show off its goods in exchange for a price. Suppliers might also be ready to give you a discount if you sign a long-term deal with them.

Companies are also responsible for making value for their employees, who are another important stakeholder. Employee happiness is the difference between how much an employee is paid and how little they're willing to take. Companies can make this gap bigger in a number of ways, such as:

Increasing pay: Most businesses don't like to raise wages, but some have done it successfully. For example, Dan Price, CEO of Gravity Payments, raised the minimum wage at his company to $80,000 per year. This led to a lot of growth and attention for the business.

Companies can also lower WTS by making working conditions more appealing to people who want to work for them. Some companies let workers work from home or in a hybrid setting to give them more freedom. A lot of them have also started to offer four-day work weeks, which often leads to more work getting done.

There are a number of ways to boost seller surplus and employee happiness without affecting the business's bottom line. Sadly, most managers only spend 7% of their time developing their workers and getting stakeholders involved. Still, a good plan makes things better for everyone, inside and outside the company.

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Implementing the strategy

Writing a business plan is only the beginning of the process. Implementation is the step that turns a plan into action. The following steps are needed for execution to go well: Make sure you have clear goals and key performance indicators (KPIs). Make sure your employees know what you expect from them and what their jobs and responsibilities are. Handle work delegation and resource allocation well Carry out the plan and keep an eye on its progress at all times. Change your plan if you need to. Make sure everyone on your team knows what they need to do to succeed and agrees on what you want to happen. Look at how the plan worked out. It's important to remember to make changes to your plan as you go along, but not to question your choices along the way. Finding this balance is hard, but it's necessary for a business plan to work.

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Find out more about how to make a good business plan. As market conditions and customer expectations change, so does a business's plan. In light of this, business leaders should always be learning new ways to make and use an effective plan. To stay on top of the latest best practices, taking an online course like HBS Online's Business Strategy class is a great idea. The course will teach you how to make a business plan that is based on value.