Business drivers

From CEOpedia | Management online

Business drivers are key aspects in achieving business determined goals, continuing success and ensuring its growth. Therefore, business drivers have crucial impact on company's performance, they are understood as[1]:

  • resources,
  • processes,
  • conditions,
  • type of offered products and services,
  • financials (cash flow, liquidity, profit etc.),
  • assets (inventories, patents, equipment, facilities etc.),
  • growth,
  • people.

Managing business drivers

Business drivers might be divided into internal and external drivers[2]:

  • Internal business drivers are within company. Usually the business can highly influence them (for example strategies and goals).
  • External business drivers are usually out of business control (for example regulations, economic conditions, weather conditions etc.). Despite company cannot influence them, the leadership might prepare how to handle them.

Company should focus on its business drivers, both internal and external. Managing them gives opportunity for growth and innovation while ignoring them might cause failures. The bigger company is, it becomes harder to identify its business drivers, however it is still manageable and might be described in the following steps[3][4][5]:

  1. Identification of business drivers should be first step, the basic division is to internal and external factors.
  2. Responding to business drivers is preparing standards (procedures, policies etc.) or any actions plans that will guide company how to react to changes.
  3. Controlling business drivers means managing internal factors as the company might shape drivers through vision, culture, plans, tactics, teams, processes, strategies, focus etc.
  4. Growing through business drivers is happening when company is moving one step forward to respond to changes in business drivers. It is connected with all previous steps and might happening by: prioritization of business development, building the right team, building brand, conducting events etc.
  5. Innovating through business drivers is not only growing but also inventing, for example many companies nowadays found it beneficial to invest in developed IT systems.

Examples of Business drivers

  • Market Positioning: This is the strategy employed by businesses in order to establish and maintain a competitive edge in their respective markets. Market positioning involves researching the target market, assessing the competitive landscape and devising a set of tactics and objectives to differentiate the business from the competition and acquire market share.
  • Strategic Planning: This is the process of setting out the company's long-term goals and objectives, and establishing the strategies and tactics to achieve them. It involves the creation of a strategic plan, which is a document that outlines how the organization will meet its objectives, and how it will measure success.
  • Financial Management: This involves managing the company's finances in order to ensure that the company has sufficient resources to meet its short and long-term goals. It involves developing budgeting and forecasting systems, monitoring cash flow, and analyzing financial performance.
  • Innovation: This is the process of creating and implementing new ideas, products, or services, in order to create value for the company. It involves the identification of opportunities, the development of prototypes, and the testing and implementation of new ideas.
  • Human Resources Management: This involves the management and development of the organization's human resources, in order to ensure that the company has the necessary skills and resources to achieve its goals. It involves recruiting, training, and managing the company's employees.
  • Technology: This involves leveraging technology to increase efficiency, reduce costs, and improve customer experience. Technology can be used to automate processes, improve communication, and create new products or services.
  • Customer Service: This involves providing excellent customer service, in order to satisfy customer needs and ensure customer loyalty. It involves monitoring customer feedback, responding to customer queries, and providing solutions to customer problems.

Advantages of Business drivers

Business drivers are key aspects in achieving business determined goals, continuing success and ensuring its growth. Therefore, business drivers have crucial impact on companies performance. Below are some advantages of business drivers:

  • Increased Efficiency: By setting clear business drivers, organizations are able to create a plan that helps them to achieve their desired goals in an efficient manner. They can set measurable objectives and strategies that can be tracked and monitored to ensure that the organization is on the right track.
  • Improved Performance: By defining business drivers, organizations are able to evaluate the performance of their employees and teams on a regular basis. This helps to ensure that the organization is achieving the desired results and that their performance is improving over time.
  • Better Planning: By creating business drivers, organizations can develop plans that allows them to stay ahead of the competition and anticipate future changes in the industry. This helps them to create strategies that can help them to stay ahead of the competition and increase their profitability.
  • Improved Communication: Business drivers help to create better communication between the different departments within the organization. This helps to ensure that everyone is on the same page when it comes to the organization's goals and objectives. It also helps to ensure that everyone is working to the same timeline.
  • Improved Decision Making: By having business drivers in place, organizations can make decisions that are based on facts and data rather than assumptions or guesswork. This helps to ensure that the organization is making the right decisions for the future of the business.

Limitations of Business drivers

Business drivers are key aspects in achieving business determined goals, continuing success and ensuring its growth. However, there are some limitations to business drivers that must be taken into consideration:

  • Resource Limitations - Business drivers are often limited by the amount of resources available, such as money, manpower, and time. This can lead to restrictions in the scope and scale of projects and initiatives, as well as cause delays in timelines.
  • Market Volatility - Market volatility can have a negative effect on business drivers, as changes in customer demand, competitor actions, and industry trends can cause disruption and uncertainty.
  • Internal Politics - Internal politics can interfere with the implementation of business drivers by causing disagreements and delays.
  • Information Overload - With rapid advances in technology, organizations are faced with an abundance of information, which can be difficult to process and act upon in a timely manner.
  • Regulatory Compliance - Regulatory compliance can be difficult to keep up with, and can lead to a decrease in efficiency.
  • Unclear Goals - Without clear goals, business drivers can become confused and misdirected, leading to a lack of direction and poor results.

Other approaches related to Business drivers

  • Strategic objectives setting: Business drivers are often used to set strategic objectives for the organization, which involve setting clear and measurable goals for each department that will be used to track performance.
  • Planning: Business drivers can be used to plan and set budgets, as well as to identify areas of potential cost savings and process efficiencies.
  • Resource allocation: Business drivers can also be used to guide the allocation of resources, such as personnel and capital, to ensure the most efficient use of the organization's resources.
  • Measurement: Business drivers are also used to measure and track the performance of the organization in relation to its stated objectives. This helps to ensure that the organization is meeting its goals and staying on track.
  • Accountability: Business drivers can also be used to hold individuals and departments accountable for their performance. This helps to ensure that each team member is contributing to the organization's success and that any issues are identified and addressed quickly.

In summary, business drivers are essential in achieving successful business outcomes. They are used to set strategic objectives, plan and allocate resources, measure performance, and hold individuals and departments accountable for their performance.

Footnotes

  1. ↑ Melvin B. Greer Jr. (2013), p.4-8
  2. ↑ Melvin B. Greer Jr. (2013), p.4-8
  3. ↑ Melvin B. Greer Jr. (2013), p.4-8
  4. ↑ Financial Planning Association (2014), p.16
  5. ↑ Ruh W., Gold-Bernstein B. (2004), p.6


Business drivers — recommended articles
Strategy of the organization — Strategy deployment — Change management — Strategic priorities — Strategic decision — Strategy — Benefits of strategic management — Quality of management — Organizational strategy

References

Author: Katarzyna Żurek

Retrieved from "https://ceopedia.org/index.php?title=Business_drivers&oldid=89929"