Chapter Six Market Strategy

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Copyright 2006 The McGraw-Hill Companies, Inc. All rights reservedMcGraw-Hill/Irwin

Chapter Six

Market Strategy


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CRITICAL ELEMENTS IN A STRATEGIC PLAN

Determining the

product market

to serve

(What markets do we

serve with what

products)

Determining thelevel of commitment

to provide resources

(What level ofinvestment in the

product market are

we willing to make)

Determining theobjectives and plans

for each functional

area

(What are thedetailed aims and

action plans)

1

2

3


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Update

historical data

Collect current

situation data

Data analysis

Develop objectives,

strategies programs

Develop financial

documents

Negotiate final plan

Measure progress

toward objectives

Audit

STRATEGY PROCESS

MODEL


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1. Define

mission

2. Develop

statement of

operating

principles and

values

3. Define

vision

4. Define

goals

Strategic

planning

foundation

Track 1

Environmental scanning Strategy development

Track 25. Define planning

assumptions &

implications:

Develop consensus

re: environment(customer/market,

competition,

suppliers, etc.)

6. Define

total

market &

most

attractivesegments

7. Define

leadership

requirements,

assess long-term

strengths &weaknesses in

attractive

segments

8. Select

segments

and define

corporate

& segmentstrategy

Business

strategy

Gap analysis Strategy integration and capability development

Track 3

9. Define capability

gaps by assessingstrengths/

weaknesses against

current capabilities

& specific

competitors in

selected segments

10. Formulate

strategiesthat yield

competitive

advantage

11. Appraise,

test &reconcile

strategy

with

functional

plans/

needs

12. Modify goals

if required,set

functional

and

business

objectives

Strategy

integration

capability

development


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HIGH IMPORTANCE

Assistance

in cost control

OVERACHIEVEMENT

UNDERACHIEVEMENT

Consistent product

quality and appearance

Reliable

delivery

Sales

support

Fast order

cycle

Lead

generation

Access to top

management

HIGH PERFORMANCE

WANTS-GETS GRID


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The Business to Business Marketplace--NowThe Business to Business Marketplace--Now

Highly

Customized

Pure

Commodity

The Business to Business Marketplace--FutureThe Business to Business Marketplace--Future

Highly

Customized

Pure

Commodity

Percent ofall products

Percent of

all products

CONCEPTUAL MAP


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Share of user $

Manufacturers Specialty Dealers Users 2000 2005

1 wholesalers

120 150 300 40% 50%

Manufacturers Distributors Users 60% 50%

2 100% 100%

101 130 200

Total spending by users$10mm $15mm

VALUE CHAIN ANALYSIS


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Threat ofsubstitutes

Bargainingpower ofsuppliers

Strugglesbetween

industry rivals

Bargainingpower of

customers

Threat ofpotentialentrants

FIVE FORCES OF COMPETITION


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Market

disruption

Identifying and creating oppor-

tunities for temporary advantagethrough understanding

Stakeholder satisfactionstrategic soothsaying

Vision for disruption

Directed at identifying new ways

to serve existing customers

better or new customers

that no one elseserves now

Capability

for disruption

Sustaining the momentum by

developing flexible capacities for: Shifting the rulesSignalingSimultaneous & sequential

strategic thrusts

SpeedSurprise

Seizing initiative to gain

advantage by

that can be applied across

many actions to build a

series of temporary

advantageous

with actions that shape, mold,

or influence the direction of

nature of the competitors

responses

Tactics

for disruption


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Arena 1

Cost & QualityArena 2

Timing & know-how

Disrupt Cats strategic strengths

Arena 3

StrongholdsArena 4

Deep pockets

Outmaneuver Cats strengths (Encircle Cat)

Boost

quality

Lower

costTiming

Rolls out

one

product

at a time

Geographic

Komatsu

moves

out of

Japanesestronghold to

Asia, Europe,

South America,

and lastly

North America

Know-how

Aggressive

R&D and

new product

program

Channels

Komatsu

moves to

direct sales,

dealers,then

regional

centers

Komatsu

builds

resources,

new plants

and user

alliances to

gain

strengths

initially

Erodes Cats

premium price,

global volume,

low costs

Picks off

Cats full

line one

by one

Undermines

Cats

Advantage

On product

innovation

Erodes

Cats World

Dominance

One place

at a time

Maneuvers

around

Cats strong

dealer

network

Erodes

Cats deep

pockets


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Visionary

leadershipTarget &

trajectoryInformation

systems

Creating &

strivingExecutionX X X X

REQUISITES FOR THE LEARNING

ORGANIZATION

Documents

Chapter Six Market Strategy