Which of the following are factors that help indicate the success of a companys business strategy?

1. Career Development
2. Understanding Key Success Factors in Business Planning

By Indeed Editorial Team

Published September 29, 2021

To prepare for strategic business planning, it's important to identify key success factors. Understanding what a vital success factor is can help you make strategic plans that are efficient, useful, and focused. Learning more about key success factors can help you be more effective when creating a strategic business plan. In this article, we discuss the definition and importance of critical success factors, along with five common factors and the five steps for choosing your company's, department's, or project's success factors.

What are key success factors?

Key success factors, also called strategic posture or competitive emphasis, are the critical elements for a company to succeed in its target market. Success factors provide a framework for a company to know what to do, when to do it, and how to do it most effectively to be competitive. These success factors are one of three elements a business uses to define its path, along with the strategic planning process and identification of specific goals. The business planning process identifies success factors by looking at various business areas, such as people, technology, and marketing.

Why are critical success factors important?

Understanding success factors is an integral part of any management position to create and execute a viable business plan. A management team works together to make decisions that directly affect the company's expectations in various areas. For example, critical success factors influence the company's expectations for employee behaviour, skills, and knowledge requirements. These factors also provide decision-making guidelines regarding the company's organizational structure, execution of plans, manufacturing practices, and marketing strategies. Identifying success factors allows a company, department, or project to remain focused on the vital areas to success while eliminating other focus areas that lack significance.

Common business or project success factors

There are common success factors for an entire organization, a particular department, or a well-focused project, including:

Finances

The finances success factor includes cash flow and the company's assets, facilities, and equipment. Areas to consider within finances include regularly reviewing pricing to remain competitive, tracking vital financial data, and ensuring financial controls are in place to monitor cash flow, expenses, and profit margin. You may also ensure that each employee understands the importance of their position and how their job affects the bottom line. Finally, a company can assess if the facilities and equipment are adequate for the quantity and quality of work performed.

Related: A Guide to Finance Skills: Definition and Examples

Human resources

An organization's human resources include its personnel and its learning and development programs to support its staff. A company or department can ensure that it hires employees carefully based on skills and strengths while also providing opportunities for growth and development. Employees must understand the organization's overall objectives and embrace the defined strategies to move the company closer to achieving its goals. This requires sharing the vision of the business, encouraging employee feedback, and ensuring personnel understand the company's expectations. Creating a culture of cooperation and open communication can help a human resource department achieve success.

Related: 13 Common Types of Jobs in Human Resources

Marketing

To ensure success in marketing, you may look at customer relations, sales, and company responsiveness. Marketing creates brand awareness and can drive sales, but it also significantly influences customer satisfaction and market sustainability. Monitor your customer's needs, wants, and values continuously. Try to respond to your customer regardless of where they are in the sales process to show you appreciate them. Marketing is also about collecting, tracking, and analyzing customer data, including sales, trends, and satisfaction levels. Encouraging customer feedback and having open dialogues with your customers can expand your understanding of your marketplace and niche.

Related: A Guide To Marketing as a Career

Operations

The area of operations focuses on the processes, procedures, and work people do within the organization. To help your operation team succeed, determine if your business's operations align with a positive customer experience. Consider the documentation, review process, and maintenance of operational functions within the organization. Examine computerized systems to assist with repeatable and consistent procedures. In addition, employee feedback, training, and participation in processes are critical to long-term business success.

Strategic focus

The success factor of strategic focus includes leadership, management, and responsible planning. This requires a company to identify its core values and its management team to exemplify these values and the company mission. All company staff understand the core values of the organization and produce work in alignment with the company's objectives and goals. Each goal identified by the leadership team has clearly defined criteria, ways to measure success, and the tools available for those working on the project. Leadership updates the strategic business plan annually with employee input and support.

How to choose vital success factors

Here are five steps to follow when selecting vital success factors for your department or next project:

1. Assemble the leadership team

The first step in choosing success factors is to assemble your leadership team. Working with individuals from other departments and various roles and leadership levels gives well-rounded and diverse views of what's essential to the company and its employees. Diversity of ideas, values, and areas of influence help ensure that success factors represent a unified business. Together, you can identify the success factors critical to the accomplishment of the department or project.

For example, if a marketing department is in charge of rebranding a retail company, you could ask various people to join the leadership team for this project from different departments and levels of the organization. It is important to collect a diverse group of opinions and perspectives, so you could ask a warehouse worker, manufacturing supervisor, purchasing manager, administrative assistant, and accounting supervisor to join along with the chief marketing officer, sales manager, and brand manager.

2. Identify the objective and goals

Because success factors support a company's overall objectives, department, or project, it's crucial to identify the objectives and goals. This gives you the framework to establish the success factors of importance. If your organization already has a well-defined mission statement, you can review it with leadership and set the goals and objectives in alignment with it. Working through the process of choosing success factors also allows revising and updating the mission statement if needed. All department and project objectives and goals ideally align with the company's mission statement and core values.

For example, a business already has a well-established company mission statement. You ensure that the objective and goals of your project align with the company's core values. The objective of the project is to relaunch the brand of your company. As a group, you identify several vital goals, including milestones for each phase and sales goals for the first three, six, and 12 months.

3. Analyze variables

Once you have identified the objectives and goals of the department or project, recognize and evaluate the potential variables. The leadership team can identify variables by asking questions about who, what, where, why, and how. For example, determining who will complete what tasks by what date can provide clarity and uncover gaps in resources, time, money, or tools.

For example, as a group, you identify and analyze the variables. Then, you select specific people to be point people for their departments, someone to liaison with the executive board and another person to provide clear communication updates to the company's staff. Finally, the group designs a viable financial budget and creates procedures for handling changes in the project's parameters.

4. Establish the critical success factors

Now that you have a diverse leadership team with a clear objective and identified variable, it's time to establish the critical success factors. You now consider the five common success factors and any others you've identified and how they contribute to the success of each variable within your plan. Of course, the ideal situation is for each success factor to provide a maximum benefit to your resources, time, money, and tools.

In our example, as a team, you discuss the five success factors of finances, human resources, marketing, operations, and strategic focus. Then you identify the things the company and department can do to support the project in each area with guidelines for measuring success. For example, within the marketing factor, the team decides to survey customers constantly through various forms of social media to gain real-time insight into the customer's reactions to the new branding message.

5. Review and follow-up

The last step to choosing critical success factors is to review and follow up constantly. The business process of success factors is an ongoing cycle of continual assessment, adjustment, and improvement. Review and follow-up require input from all leadership team members with open communication and discussion. Coming together frequently to review the plan, measure achievements of milestones, and provide guidance on adjustments is critical to the project's success.

For our example, the leadership team plans to come together once a week for a project meeting to discuss updates, challenges, and progress. Then, as a group, they can discuss any issues and brainstorm solutions. They may also provide updates on financial budgets and celebrate accomplished goals along the way.

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