Leke Olufade

Leke Olufade LO is a multidimensional professional in the areas of Accountancy, Management Consulting, Project Man

As December unfolds, may it bring you warmth, joy, and reflection. Embrace the festive spirit, cherish loved ones, and f...
01/12/2024

As December unfolds, may it bring you warmth, joy, and reflection. Embrace the festive spirit, cherish loved ones, and find peace in winter's glow.

WHAT IS WRONG WITH OUR STRATEGY: IMPLEMENTATION CHALLENGESIt is another Wednesday and time for strategy with Dr. L.O. I ...
27/11/2024

WHAT IS WRONG WITH OUR STRATEGY: IMPLEMENTATION CHALLENGES

It is another Wednesday and time for strategy with Dr. L.O. I will start a new series today in response to the question “What is wrong with our strategy?” as experiences continue to show deviation from the strategic goals: what we get is not what we planned for. The key question is: where is the problem? There are two things that can be wrong with your strategy and the results you get; we will look at them separately:
1. Strategy Design Problems
2. Strategy Implementation Challenges
The problem could be from either of the two. I will talk about the first, which is strategy design, today. Here are the things that could go wrong.

STRATEGY DEVELOPMENT

 Competence of the people who designed or developed the strategy. Most of the time, business managers are not skilled enough to develop strategies for the business. If they do not hire consultants because of cost, they may end up with strategies that will not work and cannot deliver the expected outcomes.

 Inadequate research and information in preparing for strategy development. Strategy development must be driven by information and credible data. This will usually include facts about the business environment and trends, general industry sector performance, government policies, and the political environment. Tools such as PESTLE (Political, Economic, Social, Technology, Legal, Environment) analysis will be useful.

 Wrong assumptions underlying the strategy, especially in the VUCA environment. Since strategy is about the future, assumptions must be made about the future for all possible business drivers—pricing, availability, etc.—using the scenario planning tool. Yet, as seen in Nigeria this past two years, all of these assumptions could fall flat. For example, two years ago nobody could have assumed that petrol would sell for N1,000 or electricity tariffs would go from a mere N50 to over N200 per unit within a strategic period.

 Wrong strategy adoption: copy strategy. Some businesses, especially small businesses, just copy and adopt what others are doing. This can be dangerous and become a recipe for failure. Every strategy must align with internal capacity, structure, and system. A good SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis must be done to support corporate strategy.

 Non-alignment of strategy with business resources and capacity. As mentioned under copy strategy, some may design their strategy as a nice-to-have approach without considering the capabilities of those to drive implementation, the resources required to back the strategy, etc.
These are major items, but the list is not exhaustive. Learn more.

TAKEAWAY

A poorly designed strategy will never meet expectations. Emphasis should be on developing a realistic, customized strategy that can be implemented. This will serve as a real foundation for success. Next week, we will discuss the implementation aspect. Even the best designed, customized strategy may not deliver good results if implementation is poor or shoddy. See you next week.

Visit www.lekeolufade.com. Twitter handle: lekeolufade.

STRATEGY WITH LO -THIS WEDNESDAY -13-11-24UNSOLD GOODS: NOW N1.24 TRILLIONIt is another Wednesday and time for strategy ...
13/11/2024

STRATEGY WITH LO -THIS WEDNESDAY -13-11-24

UNSOLD GOODS: NOW N1.24 TRILLION

It is another Wednesday and time for strategy with Dr L.O. The focus today is the rising value of unsold goods in Nigeria which has risen by about 357.6%. If you can guess the actual value in Naira: N1.24 trillion according to the Vanguard edition of 12 November 2024. That is significant and this is evidence of poor strategy in respect of production and product pricing in this VUCA environment.

PRODUCT PRICING: SCENARIO PLANNING STRATEGY

In the previous discussions I restated the fact that in this volatile, uncertain, complex and ambiguous environment (VUCA) one important strategy tool to leverage is scenario planning. This should be combined with a Sales forecasting tool to avoid the alarming situation of over I trillion Naira unsold goods when the population is actually ready for such products except when priced above their means. Let me recall key points:
* Identify and profile your customers- who and where they are!
* Find out what price they will be willing to buy since what affects you is equally affecting them.
* Design your production plan to ensure you produce what can be sold based on sales forecast.
* Create your pricing scenario to agree break-even point
When the value of unsold products rises by about 357.6 %, the implications are huge, and they include:
* The hold cost -warehouse, security, lighting, pilferage, deterioration- especially with expiry date.
* Production stoppage: cost of holding raw materials, cost of idle machines, idle workforce, etc., cost of capital around these costs.
* Finance cost: higher overdraft, default in facility repayments etc. administrative overhead not recovered, cash flow challenges …. So many things.
Then the strategic question or strategic option is whether all these costs would not have been more than the cost of a reasonable price discount? Trying to recover all the escalating prices of inputs through higher selling prices will not work again. There is always a break-even point.

TAKEAWAY

Every business requires agility and resilience and proactive management to ensure the right things are done driven by the right decisions. There is no more room for armchair managers who are resistant to change. The prices of these products should be discounted, encouraging bulk sales so that the money can be recouped and reused in the business. Another strategic approach is to always minimize losses. It is a serious strategic failure to produce products and not be able to sell. Yet this is avoidable.

Visit www.lekeolufade.com. Twitter handle: leke olufade

Transportation is the cost of taking the products to the buyers or outside storage. With the cost of diesel and petrol g...
11/11/2024

Transportation is the cost of taking the products to the buyers or outside storage. With the cost of diesel and petrol going higher every day, we can look into the cost here. What to do in this VUCA season is to adopt production to meet orders to minimize costs or... read full article on https://lekeolufade.com/vuca-and-business-survival-cost-management-part-6

STRATEGY WITH LO -THIS WEDNESDAY NIGERIA TODAY: STRATEGY IN VUCA ENVIRONMENT.It is another Wednesday and time for strate...
06/11/2024

STRATEGY WITH LO -THIS WEDNESDAY

NIGERIA TODAY: STRATEGY IN VUCA ENVIRONMENT.

It is another Wednesday and time for strategy with Dr L.O. So far, we have discussed possible strategies to adopt to sustain the revenue profile of the organization through scenario planning to avoid over pricing and low sales. We also looked into the cost profile of typical businesses: the direct costs that impact margins of products and services. Today we are looking at overhead costs.

COST STRATEGY: OVERHEAD COSTS

Overhead costs are so-called because they remain almost constant irrespective of the level of the activities of the business. They are deductible from the margin already achieved. The usual costs here are office rental, several administrative expenses including salary and wages, vehicle running expenses other than sales or logistic vehicles, accounting fees, advertisement, insurance, interest, travel expenses, utilities etc. in summary these are costs related to the general management and administration of a business.
The strategy to adopt is the old zero-based budgeting. Here you ask yourself what is important now and not what we used to have or do. What can we eliminate without a negative impact on productivity? The usual items are overtime, vehicle expenses, rent. If the business is not doing well, we can reduce the size of offices by sharing with other sublet, reduce some executive expenses like car expenses. I will give a typical example. The small businesses are struggling to hire good and experienced Human Resources managers, Accountants etc. The strategy of shared services will be appropriate. Professionals can provide services for multiple businesses cheaper than individual employment. Generally, overhead is scalable and now is the time to align your overhead with your level of activities. You cannot afford to retain the old practices.
As usually recommended you may need the help of management experts to carry out an overhead cost audit. Spending to save is the new mantra.

TAKEAWAY

Your overhead cost is the low hanging fruit in your cost management exercise. Drive it down through technology. You can work from home, reduce power consumption, and reduce the number of administrative cars on the road. The options are really huge out there.

Visit www.lekeolufade.com. Twitter handle:

As we journey into this month of November, I wish you all a month filled with laughter, joy, happiness, love, new opport...
01/11/2024

As we journey into this month of November, I wish you all a month filled with laughter, joy, happiness, love, new opportunities and good news...HAPPY NEW MONTH

STRATEGY WITH LO -THIS WEDNESDAY NIGERIA TODAY: STRATEGY IN VUCA ENVIRONMENT.It is another session of strategy talk with...
30/10/2024

STRATEGY WITH LO -THIS WEDNESDAY

NIGERIA TODAY: STRATEGY IN VUCA ENVIRONMENT.

It is another session of strategy talk with Dr. L.O this Wednesday.
Remember, the question this season is what strategy to survive the volatile and uncertain business environment. In the past, I discussed the adoption of scenario planning in all we do. Think ahead, make assumptions, and then take the decision of survival. I have advised that sales forecasting is very important. Do not produce what you cannot sell because of pricing. Today, I will start with cost strategy. Fortunately, I started on that in my LO on Monday. Cost is very important for business survival, especially in this season. Let us go.

COST STRATEGY

The starting point in your strategic approach is to profile your costs: where are you spending the money, what is the justification, which are the cost drivers, etc. The major costs in business are the following:

1. Procurement: This is the process of buying inputs for your business. Identifying the source, negotiating the prices, bringing the goods in, etc. Usually, this is the easiest way of losing money and escalating costs. If the process is faulty, you could be buying at higher prices than others, you could get lower quantities than you paid for, and the quality delivered may not be what you paid for. There is a high level of collusion in this process. Redesign your procurement process to ensure you get what you paid for, negotiate discounts and credit terms, etc.

2. Inventory: This is the stock of what you procure as input and what you produce and are not yet sold. This is a high-cost area: covering storage facilities, security, lighting and refrigeration, pilferage, obsolescence, deterioration, etc. All you do is to achieve a balance in your inventory levels.

3. Warehousing: This is a twin sister of inventory. Warehousing is how you keep your inventory. Higher inventories will mean bigger warehousing requirements. You can save money here if you align inventory to your sales forecast.
Next week, to conclude this part, I will discuss overhead costs and possible alternate business options for survival.

TAKEAWAY

Focus on costs within your control. These are costs outside the price of materials by suppliers. There are avoidable costs within your system: procurement, inventory, and warehousing. They can bring your costs down by up to 25%.

Visit www.lekeolufade.com. Twitter handle: .

The inflation rate is rising above 30% compared with last year, fuel price from under N500 to over N1,000, electricity c...
28/10/2024

The inflation rate is rising above 30% compared with last year, fuel price from under N500 to over N1,000, electricity cost from about N50 per unit to N222 per unit. It is therefore a reality that we manage our cost of doing business and... read full article on https://lekeolufade.com/vuca-and-business-survival-part-4

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