Strategic planning:

Think out of the box

Hiran H. Senewiratne

To succeed in any sort of business venture, managers should be strategic and think out of the box when implementing profit models not only in turbulent periods but also in good times, Indian Institute of Management, Strategy Prof Ranjan Das said.

“It is necessary to design and utilize a profit model, which is a strategy that addresses all the core elements of the business operating system that go into making the company viable and profitable, Prof. Das said at a seminar which was held last week under the topic “Alternative Profit Models” organized by E Morgan Relations.

To implement strategies one need not be a MBA graduate and or have any other education qualification, but must think out of the box and implement profits models strategically, to suit to the situation accordingly. Business designs themselves create the basis for the profit model and without a workable operating structure that addresses production, sales generation and delivery, there is no working profit model.

To ensure that there is money made above and beyond company expenses, it is necessary to make sure that each component of the company is working at top efficiency and contributing to the financial health of the organization, Prof. Das said.

The foundation of the profit model exists within the production and operating components of the model. The management must be effective in operating equipment and personnel and the product that is produced must be top quality, but manufactured at the lowest possible cost, because resources available to business entities are limited, he said.

One way to ensure this component of the profit model is working properly to maintain the operating equipment, making sure employees are trained and frequently given refresher training, and that management does not become top heavy with too many positions.

Prof. Das added that sales and marketing component of the profit model is the creative component that gets the word out and about the products and services offered by the company, and piques the interest of consumers in the products.

This may be done with the use of ad campaigns, various sales methods, and cultivating strong word of mouth among consumers. Keeping this part of the profit model operating often means being open to new ways to market the products or developing secondary products that will expand the client base.

The delivery of goods and services to the end user is extremely important to the profit model. A company may produce excellent products, but if the buyers cannot receive and make use of the goods, the entire effort is wasted, Prof. Das said.

Making sure that customers receive their orders in a timely manner, and that they have a means of contacting the company with any questions or concerns is essential to a working profit model. Therefore without communication between client and provider, there will eventually be no profit, Prof. Das said.