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BA460-Week #2: Strategic Planning

BA460-Week #2: Strategic Planning. “If you don’t know where you are going any route will get you there.” Chris Bartlett, Harvard Business School. Strategic Thinking : The Big-3 Questions:. 1.Where do we want to go? What business(es) should be in Market positions to stake out?

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BA460-Week #2: Strategic Planning

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  1. BA460-Week #2:Strategic Planning

  2. “If you don’t know where you are going any route will get you there.”Chris Bartlett,Harvard Business School

  3. Strategic Thinking :The Big-3 Questions: 1.Where do we want to go? • What business(es) should be in • Market positions to stake out? • Consumer needs & segments serve? • Outcomes to achieve? 2.Where are we now? 3.How do we get there?

  4. Company Consumers Competitors Conditions You have begun … Situation & SWOT Analysis Internal Strengths & Weaknesses External Opportunities & Threats

  5. Consumers Competitors Conditions You are finding answers re: • How the market is segmented & the relevant criteria that influence consumers use in their purchasing decisions • The nature & magnitude of the competition • Existing & emerging Economic & Technological trends that will impact demand, pricing, product design & positioning

  6. After- SWOT analysis of the situation… the next & most critical step in strategy development…oddly enough is –thinking– Specifically-thinking about the way things have been & are now… AND- the way things could/should be

  7. Need to start thinking abt: We will produce outstanding financial returns by providing totally reliable, competitively superior, global, air-ground transportation of high-priority goods and documents that require rapid, time-certain delivery." Where you want to go? *Your Mission & Vision

  8. Mission or Purpose is a precise description of what an organization does. It should describe the business the organization is in. It is a definition of “why” the organization exists A vision is a statement about what your organization wants to become … A compelling description of the state and function of the organization once it has implemented and achieved the strategic plan…

  9. http://www.bplans.com/dp/missionstatement.cfm

  10. Valuable >Strategy & Vision Statements Strategies & Mission Statements http://www.bplans.com/dp/missionstatement.cfm

  11. Then decide-- How you will get there? *Growth, Competitive & Functional Strategies

  12. Corporation Sensors Unit Nano-Tech Unit Cons.Elec. Unit Finance Production Marketing HR / R&D 3 Levels of Strategy Corporate-Level :In what business do we compete? Business-Level: How do we compete? Functional-Level : How do we coordinate?

  13. Corporate Growth Strategy Business Unit Competitive Strategy Functional Strategies R&D Marketing Positioning Production Finance Human Resources

  14. Corporation Level 1-Corporate Strategy In which businesses do we compete? Corporation ?

  15. Growth Strategy Deciding on what Products & Markets to compete with & in…

  16. Growth Strategies P R O D U C T Present New Market Penetration ProductDevelopment Present M A R K E T Diversification Market Development New

  17. MarketPenetration Increase market share among existing customers. MarketDevelopment Attract new customers to existing products Product Development Create new products for present markets Concentrate on your primary line of business & look for ways to meet growth objectives thru increasing your level of operation in your primary business

  18. Level 2: Business Unit Strategy How do we compete? Focus? Price? Quality?

  19. Also need to decide-- how you are going to compete…

  20. w/ what Competitive Advantage • ThruCost Advantage- • Offer same benefit as competitor but at lower cost • ThruDifferentialAdvantage- • Offer benefits which exceed competitors • w/in which Market Segments • All market segments • Niche segments • Evolving segments

  21. Competitive Strategy is the creation of a unique & valuable position- The position is based on- • Performing the same activities as competitors, but differently --or performing a different set of activities • Porters Generic Strategies • Strategies & Mission Statements

  22. Cost: Design, produce, market more efficiently than competitors You can also Formulate Strategy by what dimension you compete on: Differentiation: Deliver unique & superior value in terms of product quality, features, service

  23. You can Formulate Strategy by the- Number & nature of segmentscompete w/in- • Undifferentiated • Differentiated • Niche Strategy

  24. & You can Formulate Strategy by-Riding A Products Life Cycle • Adjust Marketing Mix according to natural Drift of products w/in segments-

  25. Put them all together &… • Cost/Quality Differentiation • Number & nature of segments compete w/in • Riding the Product Life Cycle

  26. Competitive Strategy Matrix: Riding Product Life Cycle #2 #3 Compete on: Broad Market Niche Mrkt Evolving Mrkt Number & nature of segments compete w/in Cost #1 Product Quality Cost/Quality Differentiation

  27. Competitive Strategies Product Life-Cycle

  28. Competitive Strategy Matrix Broad Mrkt Niche Mrkt Evolving Mrkt Compete on: Cost Product Quality

  29. Cost LeadershipStrategic Choices • A cost leader does not try to be industry innovator • A cost leader positions products to appeal to mainstream customers • The overriding goal is- increased efficiency & lower costs relative to rivals

  30. Generic Business-Level Strategy:Cost Leadership • Advantages • If rivals charge similar prices, a cost leader achieves superior profitability • A cost leader is able to charge a lower price than competitors

  31. An overall cost leader will attempt to be low-cost producer in every segment of the market. • will have good profit margins on all sales while keeping prices low for price-sensitive customers.

  32. -- seeks to dominate the price sensitive market segments. • --sets prices below all competitors — and still be profitable

  33. -- Will seek to minimize costs in marketing & production • Products will be allowed to age & change in appeal from High End, to Traditional, and eventually Low End buyers.

  34. Competitive Strategy Matrix Broad Mrkt Niche Mrkt Evolving Mrkt Compete on: Cost Product Quality

  35. Generic Business-Level Strategy: Differentiation • Create a product that customers perceive as different or distinct in an important way • Advantages • Premium price • Increased revenues = superior profitability

  36. Differentiator • A differentiator will seek to create maximum awareness & brand equity. • Wants to be well known as maker of high quality/highly desirable products

  37. Differentiation Advantages • Customers develop brand loyalty: The greater the loyalty.. The less the price sensitivity… • Differentiators can pass price increases on to customers • Differentiation and brand loyalty are barriers to entry

  38. Differentiation: Disadvantages • Difficulty in maintaining long-term distinction in customers’ eyes • Agile competitors can quickly imitate • Patents & first-mover advantages are limited • Difficulty/expense of maintaining premium pricing– requires greater marketing costs

  39. DIFFERENTIATOR w/ HIGH-TECH FOCUS A high-tech differentiator seeks to be top producer of best performing leading-edge products

  40. Competitive Strategies; Focused Differentiation: • Focus on particular group or geographic market • Seek differentiation in targeted market segment • Serve special needs of narrow target market

  41. DIFFERENTIATOR w/ PRODUCT LIFE-CYCLE FOCUS A product life-cycle differentiator seeks to be well-known as a top producer of good performing products in each of the targeted segments.

  42. Level 3- Functional Strategy How do we coordinate?

  43. What makes a decision strategic? • Multi-functional in scope & consequences • Requires choice & trade-offs, integration & alignment R&D Prdtn Mrktg

  44. In order to execute & achieve selected growth & competitive strategies--Need to coordinate decisions across all Functional domains Production R&D Marketing HR Finance

  45. Functional Integration & Strategic Alignment

  46. Getting In-Sync w/ Functional Planning The goal of functional planning is to achieve a state of Internal Strategic Alignment FINANCE PRODUCTION MARKETING

  47. INTERNAL STRATEGIC ALIGNMENT FINANCE Achieved when : All Decisions made by & within all functional areas are in sync w/ one another, As well as with the overall strategic direction of the firm PRODUCTION MARKETING

  48. Functional Planning Matrices Examples of: internal strategic alignment

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