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Strategic Planning. BA343 Week#4. Finish Situation Analysis- Explain SWOT Analysis Define & Demo Strategic Planning Company Analyses ( ie-GE & BCG ) Delineate the 3 levels Strategy Corporate level-Growth Strategy Business level-Competitive Strategy Functional Level- Strategic Alignment.

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slide2

Finish Situation Analysis-

  • Explain SWOT Analysis
  • Define & Demo Strategic Planning
  • Company Analyses (ie-GE & BCG)
  • Delineate the 3 levels Strategy
    • Corporate level-Growth Strategy
    • Business level-Competitive Strategy
    • Functional Level- Strategic Alignment
2 weeks ago started the situation analysis w the environmental scan
2 weeks ago started the Situation Analysis— …w/ the Environmental Scan

Environmental Scanning=

The process of identifying the nature & magnitude ofUncontrollable forcesin the external (macro) environmentexerting significant influenceon our strategies…

so far determined

Consumer

Conditions

Competitors

So far…determined
  • How to segment the consumer market, measure demand & relevant factors that influence consumers’ purchasing decisions
  • Your competitors relative market positions, competencies & advantages
  • Macro-E political-legal, economic, socio-cultural & technological trends relevant to your organization
slide5

Final Component of Situation Analysis

G

N

C

Service

TGT

D

E

WM

F

  • Company
  • Consumers
  • Competitors
  • Conditions
    • PEST

Growth, Competitive & Positioning Strategies

P’s

Strategic Planning

Situation Analysis

Marketing Strategy

The Marketing Mix:

company considerations
Company Considerations
  • History / Culture
  • Resources
  • Existing portfolio
  • Existing customer base
    • characteristics
    • loyalty
  • Experience
    • w/markets
    • w/ marketing
company portfolio analysis
Company Portfolio Analysis

Analyze company’s products w/ respect to:

  • How good your product is….
  • How good the market you sell it in is…
slide8

G.E Strategic Planning Model

Business Strength

Strong Average Weak

High

Low

Industry Attractiveness

Business Strength IndexIndustry Attractiveness Index

* Market Share * Market size * Price Competitiveness * Market Growth * Product Quality * Industry Profit Margin * Customer Knowledge * Amount of Competition * Sales Force and Effectiveness * Seasonality * Geographic Advantage * Cost Structure

boston consulting group s growth share matrix

STARS

PROBLEM

CHILD

CASH COWS

DOGS

Boston Consulting Group’s Growth-Share Matrix

High

Product-Market

Growth (%)

Low

10x 4x 2x 1.5x 1x .5x .2x.1x

Relative

Market Share

High

Low

bcg portfolio matrix

MARKET SHARE DOMINANCE

HIGH LOW

MARKET GROWTH RATE

LOW HIGH

BCG Portfolio Matrix

High growth

Market leaders

Require cash

Large profits

High growth

Low market share

Need cash

Poor profit margins

Low growth

High market share

High cash flow

$

Low growth

Low market share

Minimal cash flow

slide11

G

N

C

Service

TGT

D

E

WM

F

  • Company
  • Consumers
  • Competitors
  • Conditions
    • PEST

Growth, Competitive & Positioning Strategies

P’s

Strategic Planning

Situation Analysis

Marketing Strategy

The Marketing Mix:

swot analysis

S

Things the company does well.

W

Things the company does not do well.

O

Conditions in the external environment that favor strengths.

T

Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.

SWOT Analysis

Internal

External

swot analysis13

Strengths

and

Weaknesses

(INTERNAL)

SWOT Analysis
  • Production Costs
  • Marketing Skills
  • Employee Capabilities
  • Financial Resources
  • Available Technology
  • Company/Brand Image
swot analysis14

Opportunities

And

Threats

EXTERNAL

SWOT Analysis
  • Social
  • Demographic
  • Economic
  • Technological
  • Political/Legal
  • Competitive
slide15

G

N

C

Service

TGT

1st Step

D

E

WM

F

P’s

2nd Step

Strategic Planning

Situation Analysis

Marketing Strategy

The Marketing Mix:

  • Company
  • Consumers
  • Competitors
  • Conditions
    • PEST

Growth & CompetitiveStrategies

Positioning Strategy

definition strategic planning
Definition: Strategic Planning=

A series of goal-directed decisions & actions

matching your skills & resources (strengths & weaknesses)

w/ market threats & opportunities

strategic planning

EVOLVING MARKET OPPORTUNITIESand/or threats

RESOURCES & OBJECTIVES

Strategic Planning

LONG RUN PROFITABILITY AND GROWTH

strategic planning answers the 3 big questions
Strategic Planning answersthe 3 Big Questions:

1.Where are we now?

2.Where do we want to go?

3.How do we get there?

slide19

Consumer

Conditions

Company

Competitors

The Situation & SWOT Analysis

Answers the 1st Question:

Where are we now…

org goals objectives encapsulated in mission vision statement answers 2 nd question
Org. goals & objectives encapsulated in Mission & Vision Statement answers 2nd Question:

2. Where do we want to go?

  • What business(es) should be in
  • Market positions to stake out?
  • Consumer needs & segments serve?
  • Outcomes to achieve?
slide21

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…

build a strategic framework mission statement vision
Build a Strategic Framework: Mission Statement Vision

Valuable

>Part 1: Strategy & Vision Statements

>Part 2: Mission Statements

mission statement
Mission Statement

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."

slide24

“PepsiCo’s overall mission is to increase the value of our shareholders’ investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.”

slide26

Avoid Corporate Myopia

Short sightedness by firms that define their business too narrowly

marketing myopia examples
Marketing Myopia Examples

Broad Description:

  • Transportation Co.
  • Power company
  • Entertainment provider

Myopic Description:

  • Railroad company
  • Electricity company
  • Television network
market oriented vision missions
Market Oriented Vision / Missions

PRODUCT-ORIENTED VISION/MISSION STATEMENTS

MARKET-ORIENTED VISION/MISSION

STATEMENTS

COMPANY

RevlonWe make cosmetics.

DisneyWe run theme parks.

Philip Morris We Sell Cigarettes

We sell hope…we accent a

lifestyle & self expression;

We make people happy..

by providing fantastic experiences & entertainment

We provide “Life's Simple Pleasures.

slide29

Final Question answered by Strategic Planning:

1.Where are we now?

2.Where do we want to go?

3.How do we get there?

*Growth, Competitive & Functional Strategies

slide30
“If you don’t know where you are going

any route will get you there.”Chris Bartlett,Harvard Business School

3 rd q encompasses 3 levels of strategy

Corporation

Sensors Unit

Nano-Tech Unit

Cons.Elec. Unit

Finance

Production

Marketing

HR / R&D

3rd Q- Encompasses 3 Levels of Strategy

Corporate-Level :In what business should we compete?

Business-Level: How should we compete?

Functional-Level : How do we coordinate?

level 1 corporate strategy

Corporation

Level 1Corporate Strategy

In which businesses should we compete?

Corporation

?

once decided what businesses to compete in need to decide
Once decided what businesses to compete in –need to decide -

what Products & Markets to compete w/& in=

Growth Strategy

slide34

G

N

C

Service

TGT

D

E

WM

F

P’s

Strategic Planning

Situation Analysis

Marketing Strategy

The Marketing Mix:

  • Company
  • Consumers
  • Competitors
  • Conditions
    • PEST

Growth & CompetitiveStrategies

Positioning Strategy

growth strategies
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

slide37

MarketPenetration

Increase market share among existing customers.

MarketDevelopment

Attract new customers to existing products

Product

Development

Create new products for present markets

Concentrateon your primary line of business look for ways to meet growth objectives thru increasing your level of operation in your primary business

or diversify

Diversification

new products… new markets… new alliances

Or Diversify…
or diversify39
Or Diversify…

P R O D U C TS

Present

New

Market Penetration

ProductDevelopment

Present

M A R K E TS

Diversification

Market Development

New

slide40

Related

Diversification

  • Related Diversification
  • if opportunities exist to:
    • Transfer expertise/ capabilities/ technology
    • Combine related activities into single operation & reduce costs
    • Leverage use of firm’s brand name reputation

Product

Similarities

Operational

Skills-Capabilities

Customer

Profile

Similar

Technology

Distribution

Channels

examples of related diversification
Examples of Related Diversification
  • Darden Restaurants
    • Olive Garden
    • Red Lobster
    • Bahamas Breeze
  • Johnson & Johnson
    • Prescription drugs
    • Non-prescription drugs (Tylenol, pepcid AC)
    • Band-aids
    • Baby products
  • PEPSICO
    • Soft drinks
    • Fruit Juices
    • Snack foods (Fritos, Lays, Cracker Jacks)
unrelated diversification
Unrelated Diversification

Involves diversifying into businesses with

    • No strategic fit
    • No meaningful value chain relationships
    • No unifying strategic theme
  • Approach is to venture into “any businessin which we think we can make a profit”
  • Firms pursuing unrelated diversification are often referred to as conglomerates
diversification via merger acquisition
Diversification via-Merger & Acquisition
  • A popular approach to diversification- altho only ~20% succeed --M&A activity in 2004 was worth more than $1 trillion

Advantages

  • Quicker entry into target market
  • Easier to hurdle certain entry barriers
    • Technological inexperience
    • Gaining access to reliable suppliers
    • Being of a size to match rivals in terms of efficiency and costs
    • Getting adequate distribution access
diversification via joint ventures strategic alliances
Diversification via-Joint Ventures&Strategic Alliances

Good way to diversify when:

  • Uneconomical/ risky to go it alone
  • Pooling competencies for more competitive strength
  • Foreign partners needed to surmount
    • Import quotas and Tariffs
    • Nationalistic political interests
    • Cultural roadblocks
    • Lack of knowledge about markets in particular countries
slide45

2nd Level of Strategy

Corporate Level

Business unit Level

Functional strategy

Information

systems

Research &

development

Manufacturing

Finance

Marketing

Human resources

level 2 business unit strategy
Level 2: Business Unit Strategy

How do we compete?

Cost?

Quality?

Focus?

slide47

G

N

C

Service

TGT

D

E

WM

F

P’s

Strategic Planning

Situation Analysis

Marketing Strategy

The Marketing Mix:

  • Company
  • Consumers
  • Competitors
  • Conditions
    • PEST

Growth & CompetitiveStrategies

Positioning Strategy

slide48
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

generic competitive strategies

Cost: Design, produce, market more efficiently than competitors

  • Focus
  • = Competitive Scope/ Breadth of company’s target market

Differentiation:Deliver unique & superior value in terms of product quality, features, service

Generic Competitive Strategies
cost leadership strategic choices
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
generic business level strategy cost leadership
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
cost leadership disadvantages
Cost LeadershipDisadvantages
  • Competitors may lower their cost structures
  • Competitors may imitate the cost leader’s methods
  • Cost reductions can impact demand-product-service performance drop below threshold acceptability…
generic business level strategy differentiation
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
competitive strategies focused differentiation
Competitive Strategies; Focused Differentiation:
  • Focus on particular group or geographic market
    • Seek differentiation in targeted market segment
    • Serve special needs of narrow target market
differentiation advantages
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
differentiation disadvantages
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
best cost provider strategies
Best-Cost Provider Strategies
  • Combine a strategic emphasis on low-cost with a strategic emphasis on differentiation
    • Make an upscale product at a lower cost
    • Give customers more value for the money
  • Deliver superior value by meeting or exceeding buyer expectations on product attributes and beating their price expectations
  • Be the low-cost provider of a product with good-to-excellent product attributes, then use cost advantage to underprice comparable brands

Objectives

slide59

3rd Level of Strategy

Corporate Level

Business unit Level

Functional Strategy

Information

systems

Research &

development

Manufacturing

Finance

Marketing

Human resources

level 3 functional strategy
Level 3 Functional Strategy

How do we coordinate?

getting in sync w functional planning
Getting In-Sync w/Functional Planning

Finance

Production

Marketing

R & D

The goal of functional planning is to achieve a state of Internal Strategic Alignment

HR

internal strategic alignment
INTERNAL STRATEGIC ALIGNMENT

Achieved when :

  • All functional areas in sync w/ one another,
  • As well as with the overall strategic direction of the firm.
for internal strategic alignment to occur
For INTERNAL STRATEGIC ALIGNMENTto occur:
  • Marketing/R&Dmust be operating in a manner that is complementary toProduction
  • Which is complementary toHuman Resources
  • Which is complementary toFinance.
even after divining aligning strategy still have problem of implementation performance

Marketing Strategy

Even after divining & aligning strategy still have problem of implementation & performance

Organizational

Structure

Human

Resources

Marketing Performance

Communicate

Motivate

Coordinate

Climate and

Culture

Training & Reward

Programs

Implementation

the only problem
The Only Problem…
  • Only 5% of workforce gets the strategy
  • Only 25% of managers have incentives linked to strategy
  • 60% of organizations don't link budgets & strategy
  • 85% of executive teams spend <1 hour/ month discussing strategy
  • 90% fail to execute strategy successfully

Robert S. Kaplan and David P. Norton

The Strategy-Focused Organization, 2000

slide67
The Marketing Implementation Process Problem: Separation of Strategic Planning & Marketing Implementation

Very Much

Strategic Planning

  • Commitment
  • Understanding
  • Responsibility

Time Spent

Marketing

Implementation

Very Little

Chief

Executive Officer

Mid-level

Marketing

Managers

Customer

Contact

Managers

even after divining aligning strategy still have problem of implementation performance68

Marketing Strategy

Even after divining & aligning strategy still have problem of implementation & performance

Organizational

Structure

Human

Resources

Marketing Performance

Climate and

Culture

Training & Reward

Programs

Implementation

corporate culture
Corporate Culture

Shared Beliefs & Values -

  • How employees behave w/ each other
  • How employees behave w/ customers/clients
  • How employees view their relationship w/ stakeholders
  • How employees view their relationship w/ community
  • How the organisation treats its employees –
benefits of strategic planning
Benefits of “Strategic Planning”

objectives

  • Makes managers more alert to “winds of change, new opportunities, as well as threatening developments”
  • Guides entire firm regarding “what it is we are trying to do and to achieve
  • Unifies numerous strategy-related decisions and organizational efforts
  • Provides basis for evaluating competing budget requests

Strategy

Operations

slide72
Strategic thinkingplanning & managementwithin & acrossall levelsof the organization

Strategy

Involves:

slide73
Specifically-thinking about the way things have been & are now… AND- the way things could/should be
slide74

NEW

CULTURE

slide75
OLDCircus Traditional animal acts, painted clowns, and high-wire stunts make for a very tired form of entertainment.
slide76
NEWCirque du Soleil - dramatic rethinking of what a circus can be, with amazing costumes, music & gymnastics
slide77
OLD

Grocery stores are big, messy places where you go to buy plastic-wrapped and hot-house grown fruits and vegetables.

slide78

NEW

Whole Foods where food shopping is a full on aesthetic experience-this is their wall of cheese!

slide79
OLD

Cotton Mop P&G studied the art of cleaning in search of something better than a wet mop, which spreads as much dirt as it picks up

NEW

Swiffer P&G came up with a whole new way to clean--using electrostatic attraction. A revolutionary dry mop is born

slide80

NEW

Sirius-Subscriber model brings a rich variety of content via satellite to your car and your handheld.

OLD

Radio Same old, same old ad-choked, pre-programmed music and talk, from big national chains.

slide81

“At Sony we assume that all products of our competitors have basically the same technology, price, performance and features.Design is the only thing that differentiates one product from another in the marketplace.”Norio Ohga

slide82

NEW

The Apple Store is spare, elegant, and appealingly interactive—a hip place to be on a Sat. night.

OLD

Best Buy has crowded shelves, overwhelmingchoice, and standard sales pitches.

slide83
OLD

Golden Nugget Casino: Las Vegas' early emphasis on gambling overshadowed amenities, entertainment, and atmosphere.NEW

Luxor Hotel and Casino: Exotically themed hotels with elaborate décor and high-end restaurants have given Vegas added allure.

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