Hong Kong Manufacturing SMEs: Preparing for the Future

107• Identify the key functional policies necessaryto carry out the strategyOne key to good strategy is internal consistency.All of the functional policies of the firm(production, marketing, financing, administration,etc.) should be consistent with the overallstrategy. SME managers should identify how theirfunctional policies support each other and supportthe vision and goals of the company. If this cannotbe determined, then something in the strategy orits implementation will need to be changed.• Think through different alternatives to getwhere the company needs to goToo often SME managers seize upon theirfirst solution to a problem without thinkingthrough different alternatives before reachinga conclusion. The firm should think throughmultiple options before making major strategicdecisions. Some options may be incremental,some may require stretch, some may be radical.The important thing is not to limit options tooearly before potentially beneficial options areproperly explored.• Identify and arrange the resources necessaryto carry out the strategyToo often SMEs embark on a strategy withoutan adequate sense of the human, financial, andother resources that are required to successfullyimplement the strategy. While detailed resourcerequirement lists may take time to put together,managers are often surprised how quickly theycan come a good estimates of the key resourcesthey require.• Implement the strategyThe best strategy in the world will not be effectiveunless it is implemented properly. This requires aphased approach with clear milestones along theway. It also requires clear communication and asense of shared purpose within the company.• Understand when to change strategyStrategies usually evolve over time. Companiesmust constantly check to see if their strategy issuitable to the external environment and whenchange may be necessary. When a strategy isno longer yielding strong performance, andthere are no improvements in sight, it is time toreconsider the strategy.Understanding CustomersMany SMEs are “order fillers” that act in responseto specific customer orders without understandingthe full requirements of the customer. This makes itdifficult for the SMEs to differentiate themselves orto offer specific services that might enhance theirvalue to customers:• Use the ”order” as starting pointThe firm should think beyond the details of theorder to understand the customer’s business andhow the order fits into it.• Think about new ways to create value forthe customerAn understanding of stated and unstatedcustomer requirements or benefits can providea basis for a longer term and more evenhanded relationship than is the norm. Newways of creating value could include performingadditional functions such as design, managinglogistics and inventories, or other activities• Explore ways of expanding business withexisting customersExisting customers are always the easiest to sellto. Understanding customer requirements is thebest way to explore whether there is a potentialto expand share in the existing product lines,sell to or support the customers in new productlines, or develop business with similar potentialcustomers.