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Business Planning

Business Planning. Business plans guide entire organization or its business units Bplans.com provides several examples. Marketing Plans. Describe the marketing environment Outline marketing strategies Identify plans for implementation and evaluation. Strategic Planning.

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Business Planning

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  1. Business Planning • Business plans • guide entire organization or its business units • Bplans.com provides several examples

  2. Marketing Plans • Describe the marketing environment • Outline marketing strategies • Identify plans for implementation and evaluation

  3. Strategic Planning • Strategic planning is the managerial decision process that matches the organization’s resources and capabilities to its market opportunities for long-term growth • Firms may become multi-product companies with self-contained divisions • Strategic Business Units (SBUs) • Example: The Walt Disney Company or Hyundai

  4. Planning at Different Levels

  5. Functional Conducted by mid-level managers Includes Marketing as well as Finance, Operations, HRM, etc. Operational Conducted by first-line managers Includes day-to-day execution of tactical plans Lower Levels of Planning

  6. Strategic Planning Steps Define the organization’s mission Evaluate internal/external environments Set objectives Establish the business portfolio

  7. Define the Organization’s Mission • A mission may begin with these questions: • What business are we in? • What customers should we serve? • How should we develop the firm’s capabilities and focus its efforts?

  8. Sample Mission Statements • MADD: To stop drunk driving, support the victims of this violent crime, and prevent underage drinking. • Under Armour: To find new technology and enhance the performance of every athlete and outdoorsman. Lighter. Faster. Stronger. Better.

  9. Evaluate the Internal/External Environment Strengths Weaknesses Opportunities Threats

  10. Set Organizational and SBU Objectives • SBU objectives must support the overall objectives of the firm Profitability Customer Satisfaction Market Standing Return on Investment Revenue and Sales

  11. Establish the Business Portfolio • For firms with different SBUs, planning also includes allocating resources among the businesses • Each SBU is a separate profit center within the larger corporation • Each SBU is responsible for its own costs, revenues, and profits

  12. Crest Crest toothpaste products are part of P&G’s portfolio that ranges from personal care products to coffee

  13. Portfolio Management • The range of products owned by a large firm is called a business portfolio • Portfolio analysis allows a firm to assess the potential of its products and businesses • BCG Growth-Market Share Matrix

  14. Boston Consulting Group

  15. BCG Matrix

  16. BCG Matrix • Method focuses on the potential of a firm’s existing successful products to generate cash that the firm can then use to invest in new products • New products are chosen for their potential to become future cash generators • Two dimensions: • Market growth rate • Relative market share

  17. BCG Matrix: Stars • SBUs with dominant market share in high-growth markets • requires funding to keep up with production and promotion demands • strategies seek to maximize market share in the face of increasing competition

  18. BCG Matrix: Cash Cows • SBUs with dominant market share in a low-growth potential market • product is well established and market share can be maintained with minimal funding • firms milk cows of profits to fund growth of other products in portfolio • too many cows can become a liability due to the lack of growth potential

  19. BCG Matrix: Question Marks • SBUs with low market shares in fast-growth markets • sometimes called problem children • the firm has failed to compete effectively • The dilemma? Investing more money into the SBU may: • improve market share in a high potential market OR • result in negative cash flow and failure

  20. BCG Matrix: Dogs • SBUs with small market share in a slow-growth market • specialized products in limited markets unlikely to grow • firms may sell dogs to smaller firms or eliminate product from market • dogs may be an important product that showcases the firm’s distinctive competency

  21. Developing Growth Strategies • Product-Market Growth Matrix illustrates different growth strategies • Two dimensions • opportunities for growth in existing or new markets • allocating resources into existing products or new products • Four strategies result

  22. Figure 2.4: Product-Market Growth Matrix

  23. Steps in the Marketing Planning Process 1. Perform a situation analysis 2. Set marketing objectives 3. Develop marketing strategies • Select a target market • Develop marketing mix strategies 4. Implement marketing strategies 5. Monitor and control strategies

  24. Under Armour Woman Under Armour targets athletes of both sexes who seek moisture control when they play or work out

  25. Jet Blue Part of Jet Blue’s product strategy is to provide in-flight diversions to bored passengers

  26. Operational Planning • Day-to-day execution of the marketing plan • Performed by first-line supervisors • Timed over 1-2 months

  27. The Internal Business Environment • Corporate Resources and Competencies • Corporate Culture • Risk-Taking Cultures • Profit-Centered versus People-Centered Cultures

  28. The Economic Environment • The Business Cycle • All economies go through cycles of prosperity, recession, and recovery • The cycle directly affects marketers because of its effect on consumer behavior • The Power of Expectations • Consumer confidence represents consumer beliefs about what the future holds • Like business cycles, it affects whether consumers buy or cut back on spending

  29. Consumer Confidence Index

  30. The Competitive Environment • Analyzing the Competition • Strengths and weaknesses analysis • Competitive intelligence (CI) • Competition in the Microenvironment • Competition in the Macroenvironment

  31. Competition: The Microenvironment • In the microenvironment, competition means the alternatives from which the target may choose • Level 1: competition for discretionary income (for income left after a consumer pays for necessities) • Level 2: product competition in which different products attempt to satisfy the same needs or wants • Level 3: brand competition in which competitors offering similar products compete for consumer choice

  32. Competition: The Macroenvironment • Overall structure of industry • monopoly - when one seller controls market • oligopoly - relatively small number of sellers, each with a substantial share of market • monopolistic competition - many sellers compete for buyers; each offers a slightly different product and has a small share of market • perfect competition - many small sellers each offering the same product

  33. Competition: The Macroenvironment Share of Market per Firm: High Low Number of Firms in Market: Low High Monopoly Oligopoly Monopolistic Competition Perfect Competition

  34. The Legal Environment • Regulatory Agencies • Food and Drug Administration • Federal Trade Commission • Federal Communications Commission • Interstate Commerce Commission • Consumer Product Safety Commission • Environmental Protection Agency

  35. The Sociocultural Environment • Characteristics of society • Characteristics of people in that society • Cultural values and beliefs

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