You're listening to Business English Pod, the business English podcast for professionals on the move.
Hello, and welcome back to Business English Pod for today's lesson on strategic decision-making.
This is the first of a pair of lessons on business strategy.
Just head over to www.businessenglishpod.com.
Every day, business leaders face tough decisions that involve difficult trade-offs.
Should we put our time and money into a new opportunity or build capacity in our current operations?
Should we partner with Company X or Company Y?
Should we expand East or West?
These decisions are often informed by an overall corporate strategic plan.
But that plan can't account for all possible futures.
Big picture plans don't make the decisions, but rather support decision making.
And when the world seems more uncertain, complex and volatile than ever, the stakes are high for every decision.
There's lots to consider when making a strategic decision.
For starters, we need to think about how the decision aligns with our main goals.
For new opportunities.
We need to think about growth potential, costs and profit margins and we need to be sure we have the right competitive advantage to pursue the opportunity.
In today's dialogue, we'll listen to a conversation between Paolo, Adrian, and Michelle.
They work for a solar panel company that is focused on commercial projects and corporate clients.
Now they're debating the strategic merits of a possible move into the residential market.
As you listen to the dialogue, try to answer the following questions.
1.
After talking about overall goals, what does Paolo get very excited about?
2.
What topic does Adrian have many questions about?
3.
At the end of the conversation.
Why does Paolo believe they will be successful in the residential market?
Good.
Now, I think we should take a look at the residential opportunity with Pelican Homes.
Lot to discuss there.
We really need to figure out whether this is worth exploring further.
Yes, lots to talk about.
So let's look at the big picture.
How do you feel about how this fits with our overall goals?
I think it's a good fit, actually.
One of our priorities is developing new markets, and this is exactly that.
Yeah, I guess I can see that.
Not our bread and butter, but...
But it's got amazing growth potential.
You saw those stats I sent around.
The residential market, at least stateside, is expected to grow by 22% a year.
That might be a bit bullish, but net metering is now mandated in over 40 states.
And with all the new subsidies, it's definitely booming.
But do we have a sense of the costs involved?
Not just startup, but ongoing?
How different is residential from commercial?
My understanding is that startup costs wouldn't be too bad.
Maybe some facilities or warehousing stuff.
Ongoing, I get the sense that customer service is a lot more time-consuming on the residential side.
Not surprising, but good to get numbers on that as a next step.
And I guess related to costs, I'd love to see some data on the margins.
There's a lot more competition in residential.
That has pricing implications.
But materials are cheaper, so not sure what it all means.
That's a good point.
Certainly from what I've been seeing, there's a lot of people looking to get in on the ground floor.
A ton of new businesses starting up.
We've got a hell of an edge, though.
Exclusive distribution deals, price advantage, and whatnot.
And with our depth of experience compared to these newer startups, I feel we're in a good position overall.
Now let's go through the dialogue again and look at the language and techniques used by our three colleagues.
Paolo begins by introducing the idea of moving into the residential business, which means serving individual homeowners.
Good.
Now I think we should take a look at the residential opportunity with Pelican Homes.
Lot to discuss there.
We really need to figure out whether this is worth exploring further.
Yes, lots to talk about.
So, let's look at the big picture.
How do you feel about how this fits with our overall goals?
Paolo's first question is about the big picture, or the broad, high-level perspective.
More specifically, he's asking whether the opportunity fits or matches the company's goals.
Understanding goal alignment is often the first thing we consider when making strategic decisions.
The whole reason we make broad goals is to provide organizational focus.
So if something doesn't fit with these goals, we shouldn't really be considering it.
Let's run through some more ways of asking about overall goal alignment when making strategic decisions.
Does this match the strategic goals we've set for ourselves?
I wonder how this aligns with our core priorities.
How does this fit in with our overall approach to growth?
Now let's find out if the group thinks this opportunity aligns with the company's goals.
I think it's a good fit, actually.
One of our priorities is developing new markets, and this is exactly that.
Yeah, I guess I can see that.
Not our bread and butter, but...
Michelle identifies how moving into the residential market fits with one of their big priorities or areas of focus.
Adrian sounds less sure, though.
As he points out, it's not their main area of work or their bread and butter.
But Adrian doesn't really have a chance to finish his thought as Paolo introduces another very important consideration.
But it's got amazing growth potential.
You saw those stats I sent around.
The residential market, at least stateside, is expected to grow by 22% a year.
Growth potential is all about how much an area of business is likely to grow in the future.
In this case, Palo says the stats or statistics point to amazing growth in the residential market.
Of course, the most strategic opportunities are often those with the greatest growth potential.
You don't want to throw your resources into something that doesn't have a bright future.
So let's practice some more ways of discussing the growth potential of a new opportunity.
From what I've seen, we can anticipate significant growth in this area.
Research suggests that we'll see the market grow by 50% this decade.
All the signs indicate that this market is just going to get bigger and bigger.
Now let's get back to the dialogue.
As we hear, Michelle provide some reasons for being positive, while Adrian expresses some important concerns.
That might be a bit bullish, but net metering is now mandated in over 40 states.
And with all the new subsidies, it's definitely booming.
But do we have a sense of the costs involved?
Not just startup, but ongoing?
How different is residential from commercial?
Michelle is talking about how many states are creating policies, including subsidies or financial support, that will encourage more homeowners to move to solar power.
This is a good reason to believe the residential market is booming or growing quickly.
But growth potential isn't the only consideration.
It doesn't matter how much growth potential there is if it costs you too much to compete.
And so Adrian wants to ask about the cost implications of this new line of business.
As he notes, there's both startup or initial costs and ongoing costs.
You can't assess a new opportunity without assessing the costs involved.
So let's try some more ways to ask about cost implications.
So, how much is this going to cost us?
How much do you think this will increase our operating budget?
Do you have a sense of the costs involved?
In response to Adrian's questions, Paolo has some further information, but the topic of costs leads Adrian directly to another fundamental financial concern.
Let's listen.
My understanding is that startup costs wouldn't be too bad.
Maybe some facilities or warehousing stuff.
Ongoing, I get the sense that customer service is a lot more time-consuming on the residential side.
Not surprising, but good to get numbers on that as a next step.
And I guess related to costs, I'd love to see some data on the margins.
There's a lot more competition in residential.
That has pricing implications.
But materials are cheaper, so not sure what it all means.
Adrian is very focused on the numbers or data.
This is very important, as strategic decisions should be supported by evidence.
Our intuition or gut feelings can be useful, but the best decisions are supported by data.
Adrian wants data not just on costs, but on margins.
Margins refer to profit margins or the difference between sales and costs.
With more competition in residential markets, prices might be lower.
So if there's still some questions about the costs involved, it's not clear what the profit margins would be.
What are some other ways to discuss profit margins when making strategic decisions?
Let's run through some more examples.
What are the profit margins on a venture like this?
I'd like to know how much money we would make per unit.
What does it look like when we compare costs to the retail price?
The issue of competition that Adrian raises is clearly an important one.
Let's find out what Michelle and Paolo think about this issue.
That's a good point.
Certainly from what I've been seeing, there's a lot of people looking to get in on the ground floor.
A ton of new businesses starting up.
We've got a hell of an edge though.
Exclusive distribution deals, price advantage and whatnot.
And with our depth of experience compared to these newer startups, I feel we're in a good position overall.
Michelle is focused on the fact that a ton or many new businesses are entering the residential market.
That would obviously make it tougher for their company to succeed, but Paolo remains positive.
Paolo is focused on another critical consideration, competitive advantage.
That is, do you have something specific that will allow you to beat out other companies?
Competitive advantage could be related to many things, including business strengths, branding capabilities and experience.
Paolo mentions several factors that give their company a competitive advantage, or edge as he calls it.
Let's try some more ways to identify competitive advantages.
Well, we're clearly the cheapest option on this kind of thing.
Unlike the competition, we have established relationships in this market.
I think we have the capabilities to really succeed at this.
By identifying their competitive advantages.
Paolo supports his idea that they're in a good position to enter the residential market.
And that's just one of many considerations the group has explored as they debate whether to pursue this new opportunity.
Now let's practice some of the language we learned in today's lesson.
Imagine you work for a well-established retail company.
You are talking with a colleague about whether you should move into the online retail business.
You'll hear a cue by your colleague.
Then I'll give you a suggestion for what you can say in response.
We'll guide you through each step in the practice and provide an example answer for each response.
Ready?
Let's give it a go.
So let's have a look at this online retail idea.
Thoughts?
Start by asking whether the project fits with the company's overall goals.
Answer.
Well, I wonder how this fits with our overall goals.
I think it does. we could definitely capture more of the market.
Now agree and say that online retail will continue to grow in the future.
Answer.
For sure.
And online retail will continue growing in the future.
Definitely.
This could really take us to the next level.
Next, ask about the costs of launching a retail business online.
Answer So, what about the costs of launching a retail business?
Well, in terms of cost, they'd be much lower than physical stores.
Now ask if lower costs would translate into better margins.
Answer And would lower costs translate into better margins?
The margins look great.
Of course, there's a lot of competition for those profits.
Finally, agree and say that your competitive advantage is your brand recognition.
Answer.
True, but our competitive advantage is our brand recognition.
Now let's practice some of the vocabulary we've covered in this lesson.
In a moment, you'll hear a series of sentences with a word replaced with a beep.
Repeat each sentence, including the missing word.
For example, if you hear, Do you have a good of the costs involved?
You can say, Do you have a good sense of the costs involved?
After each response, we'll provide the correct answer.
Let's begin.
Answer.
Instead of focusing on details, let's talk about the big picture.
Well, just off the top of my... I can think of a few good options.
Answer.
Well, just off the top of my head, I can think of a few good options.
We need to figure... How to spend our remaining budget.
Answer.
We need to figure out how to spend our remaining budget.
Answer.
We sell some hardware, but software is really our bread and butter.
We've reached the end of this lesson on strategic decision-making.
We've learned how to ask about goal alignment and discuss growth potential.
We've also covered how to talk about costs, profit margins, and competitive advantage.
For more practice.
Premium members can access the online quizzes and PDF transcript for this and other lessons on the BEP website.
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Thanks for listening and see you again soon.
