Lecture on Strategic Planning

8/13/2019 Lecture on Strategic Planning

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Developing Marketing

Strategies and Plans

2


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2-2 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Figure 2.2 The Strategic Planning,

Implementation,

and Control Processes


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Strategic Planning

Strategic Planning is the process of developing and

maintaining a Strategic fit between the organizations

goals and capabilities and its changing marketing

opportunities. Strategic Planning involves-1. Defining the corporate mission

2. Setting objectives

3. Designing business portfolio

4. Coordinating functional efforts



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Corporate Headquarters

Planning Activities

Define the corporate mission

Establish strategic business units

(SBUs) Assign resources to each SBU

Assess growth opportunities


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1. Defining the corporate Mission

Missionis a statement of the organizationspurpose- what

it wants to accomplish in the larger environment.

It seeks to provide a sense of purpose, direction and

opportunityTo define the mission, the company should address the

following questions:

What is our business?

Who is the customer? What is of value to the customer?

What will our business be?

What should our business be?



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Characteristics of Good Mission

Statements

Focus on limited number of goals

Stress major policies and values

Define major competitive spheres

Take a long-term view

Short, memorable, meaningful
http://www.communitycoffee.com/http://www.communitycoffee.com/


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Table 2.3Product vs. Market Oriented Mission

Company Product Market

Missouri-Pacific

Railroad

We run a railroad We are a people-

and-goods mover

Xerox We make copying

equipment

We improve office

productivity

Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We entertain

people


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2. Establishing Strategic Business

Units

Strategic Business Unit is a unit of the company that has

a separate mission and that can be planned independently

from the rest of the company. It can be a company

division, a product line within the division, and sometimes

a single product or brand.


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Characteristics of SBUs

It is a single business or collection of

related businesses

It has its own set of competitors

It has a manager responsible for

strategic planning and profitability



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3. Assigning Resources to Each

SBU

The purpose of identifying the company's strategic

business units is to develop separate strategies and assign

appropriate funding.

Two of the best-known business portfolio evaluation

approaches are -

1. Boston Consulting Group (BCG) Approach

2. The General Electric (GE)Approach



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Boston Consulting Group (BCG) Approach


The growth-share matrix is divided into four cells

based on market growth rate and relative market

share.

Figure:BCG Growth-Share Matrix


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Boston Consulting Group (BCG)

Approach

Stars are high-share businesses or

products.

Cash cows are low-growth, high-share

businesses or products.

Question marks are low-share business

units in high-growth market.

Dogs are low-growth, low-share businesses

or products



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SBU Strategies

1.Build/Invest- Question Marks

2. Hold/Maintain- Stars and strong Cash

cows

3. Harvest- Weak Cash Cows

4. Divest- Dogs



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The General Electric Business Screen was originally

developed to help marketing managers overcome the

problems that are commonly associated with the Boston

Matrix (BCG).

The GE approach introduces a three by three matrix. It

utilizes industry attractiveness as a more inclusive

measure than BCG's market growth and substitutes

competi tive positionfor the original's market share.


General Electric (GE) Approach


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Market attract iveness depend s

on:

Size of market.

Market rate of growth.

The nature of competition and

its diversity.

Profit margin.

Impact of technology, the law,

and energy efficiency.Environmental impact.

Comp et it ive pos i t ion depends

on:

Market share.

Management profile.R & D.

Quality of products and services.

Branding and promotions

success.

Place (or distribution).

Efficiency.

Cost reduction.


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The GE matrix is divided into nine cells, which in turn fall into three

zones-

upper left corner

lower left to upper right corner

lower right corner

The three cells in the upper left corner indicate strong SBUs in

which the company should invest or grow. The diagonal cells

stretching from the lower left to upper right indicate SBUs that are

medium in overall attractiveness. The company should pursueselectivity & manage for earnings in these SBUs. The three cells in

the lower right corner indicate SBUs that are low in overall

attractiveness. The company should give serious thought to

harvesting or divesting these SBUs.



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3. Planning New Businesses

The company plans for its existing businesses allow it to project total

sales & profits. If there is agap between future desired sales and

projected salescorporate management will have to develop or acquire

new business to fill it.


Strategic Planning Gap:


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3. Planning New Businesses

Three options are available to fill up the strategic planning

gap:

The first is to identify opportunities to achieve further

growth within current businesses (Intensive growth

opportunities)

The second is to identify opportunities to build or acquire

businesses that are related to current businesses

(Integrative growth opportunities)

The third is to identify opportunities to add attractive

businesses tat are unrelated to current businesses

(Diversification growth opportunities)



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Intensive Growth Strategies


2000 Prentice Hall

Three Intensive Growth Strategies:

Ansoffs Product/Market Expansion Grid

Three Intensive Growth Strategies:

Ansoffs Product/Market Expansion Grid

4. Diversification2. Marketdevelopment

Newmarkets

1. Marketpenetration

Existingmarkets

Existing

products

3. Productdevelopment

New

products


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Integrative Growth strategies

1. Backward integration (integration with

the suppliers)

2. Forward integration (integration with

the distributors)3. Horizontal integration (integration with

one or more of the competitors)



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Diversification Growth

Strategies

Diversification growth makes sense when good

opportunities can be found outside the present

businesses. Three types of diversification are

possible:

1. Concentric diversification strategy ( new

products, new market, technology or marketing may

be related)

2. Horizontal diversification strategy (new products,

new/current market, technology unrelated)

3. Conglomerate diversification strategy (new

products, new market, new technology)



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Figure 2.5 The Business Unit

Strategic Planning Process


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SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats


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Porters Generic Strategies

Overall Cost Leadership

Differentiation

Focus


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Marketing Plan Contents

Executive summary

Table of contents

Situation analysisMarketing strategy

Financial projections

Implementation controls

Documents

Lecture on Strategic Planning