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6-1
Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Chapter Six
Market Strategy
6-3
CRITICAL ELEMENTS IN A STRATEGIC PLAN
Determining the product marketto serve
(What markets do we serve with what products)
Determining the level of commitment to provide resources
(What level of investment in the product market are we willing to make)
Determining the objectives and plans for each functional area
(What are the detailed aims and action plans)
1
2
3
6-4
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
6-5
1. Define mission
2. Develop statement of operating principles and values
3. Define vision
4. Define goals
Strategicplanning 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 attractive segments
7. Defineleadership requirements, assess long-term strengths & weaknesses in attractive segments
8. Select segments and define corporate & segment strategy
Business strategy
Gap analysis Strategy integration and capability development
Track 39. Define capability
gaps by assessing strengths/weaknesses against current capabilities & specific competitors in selected segments
10. Formulate strategies that 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
6-6
HIGH IMPORTANCE
Assistancein cost control
OVERACHIEVEMENT
UNDERACHIEVEMENT
Consistent product quality and appearance
Reliable delivery
Sales support
Fast order cycle
Leadgeneration
Access to top management
HIGH PERFORMANCE
WANTS-GETS GRID
6-7
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 of all products
Percent of all products
CONCEPTUAL MAP
6-8
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
6-9
Threat of substitutes
Bargaining power of suppliers
Struggles between
industry rivals
Bargaining power of
customers
Threat of potential entrants
FIVE FORCES OF COMPETITION
6-10
Marketdisruption
Identifying and creating oppor-tunities for temporary advantage
through understanding
•Stakeholder satisfaction•strategic soothsaying
Vision for disruption
Directed at identifying new waysto serve existing customers
better or new customersthat no one else
serves now
Capabilityfor disruption
Sustaining the momentum by developing flexible capacities for:
•Shifting the rules•Signaling•Simultaneous & sequential strategic thrusts
•Speed•Surprise
Seizing initiative to gainadvantage by
that can be applied acrossmany actions to build a
series of temporaryadvantageous
with actions that shape, mold,or influence the direction of nature of the competitors’
responses
Tacticsfor disruption
6-11
Arena 1Cost & Quality
Arena 2Timing & know-how
Disrupt Cat’s strategic strengths
Arena 3Strongholds
Arena 4Deep pockets
Outmaneuver Cat’s strengths (“Encircle Cat)
Boostquality
Lowercost
TimingRolls out
oneproductat a time
GeographicKomatsumovesout ofJapanesestronghold toAsia, Europe,South America,and lastlyNorth America
Know-howAggressiveR&D andnew productprogram
ChannelsKomatsumoves todirect sales,dealers,thenregionalcenters
Komatsubuildsresources,new plantsand useralliances togainstrengthsinitially
Erodes Cat’spremium price,global volume,low costs
Picks offCat’s fullline oneby one
UnderminesCat’sAdvantageOn productinnovation
ErodesCat’s WorldDominanceOne placeat a time
ManeuversaroundCat’s strongdealernetwork
ErodesCat’s deeppockets
6-12
Visionaryleadership
Target &trajectory
Informationsystems
Creating &striving
ExecutionX X X X
REQUISITES FOR THE LEARNING ORGANIZATION