Business Plans For Dummies®, 2nd Edition

Chapter 9. Focusing On What You Do Best

In This Chapter

• Describing what your company does

• Constructing a value chain

• Searching for your competitive advantage

• Focusing on your company's core competence

• Sustaining a competitive advantage over time

• Using the value chain to allocate resources

Every time you leave the house to go shopping, you gear up to make a complex set of choices that together determine what you finally come home with at the end of the day. As you look down the shopping list over morning coffee, the decisions begin:

• Town centre shops or the out-of-town shopping precincts?

• Speciality shops or a department store?

• Designer brands or store labels?

• £25, £50 or £100 limit?

If you happen to be in the business of producing and selling products in shops, these are make-or-break decisions. How do shoppers make their choices? Why do they go into one shop and not the next? What determines where they stop to browse and what they take a second look at? How are customers different from one another? In what ways are they the same? No matter what industry you're in, the same kinds of questions are just as crucial.

As they go about making decisions on what to buy and where to shop, customers continually weigh various combinations of product or service benefits against price. When customers make their choices based on their own calculation of the best value they can find in the marketplace, they are using a value equation. (Check out Chapter 7 if you want to know more about that equation.) But ...