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CHAPTER 4. Market-Oriented Strategic Planning. PERSPECTIVES OF THE FIRM. Objective of the firm is to: Maximize profits - Economist Maximize shareholder value – Financial type Create customer-satisfying value at a profit - Marketing

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chapter 4

CHAPTER 4

Market-Oriented Strategic Planning

perspectives of the firm
PERSPECTIVES OF THE FIRM
  • Objective of the firm is to:
  • Maximize profits - Economist
  • Maximize shareholder value – Financial type
  • Create customer-satisfying value at a profit - Marketing
  • Balance the interest of shareholders, customers, employees, suppliers, and the community – Management type.
  • These perspectives shape the strategic planning process within the firm.
the firm as a system
THE FIRM AS A SYSTEM
  • The following are performed:
  • Coordination, integration, Mutual Purpose, An Objective
  • Objective of superior customer value at reduced cost provides guidance and direction
  • Market realities drive the firm
market orientation
MARKET ORIENTATION
  • There are three behavioral components:
  • Customer Orientation
  • Competitor Orientation
  • Inter-functional Coordination
  • There are two Decision Criteria:
  • Long-Term Focus
  • Profitability
strategic planning
STRATEGIC PLANNING
  • Developing a game plan for achieving long-run objectives based upon existing opportunities and resources.
  • Strategy should ensure long-run survival and growth
  • The aim of strategic planning is to develop a Sustainable Competitive Advantage (Low Cost, Focus, Differentiation, Preemptive Move, Synergy).
porter s competitive strategies
Porter’s Competitive Strategies

Cost Leadership:

  • Low-cost competitive strategy
  • Aimed at broad mass market
  • Aggressive construction of efficient-scale facilities
  • Cost reductions
  • Cost minimization
porter s competitive strategies1
Porter’s Competitive Strategies

Differentiation:

  • Broad mass market
  • Unique product or service
  • Charge premiums
  • Lower customer sensitivity to price
porter s competitive strategies2
Porter’s Competitive Strategies

Cost focus:

  • Low cost competitive strategy
  • Focus on particular buyer group or market
  • Niche focused
  • Seek cost advantage in target market
porter s competitive strategies3
Porter’s Competitive Strategies

Differentiation focus:

  • Focus on particular group or geographic market
  • Seek differentiation in targeted market segment
  • Serve special needs of narrow target market

Stuck in the middle:

  • No competitive advantage
  • Below-average performance
strategic market planning
STRATEGIC MARKET PLANNING
  • With Strategic Planning There Are THREE Key Questions:
  • 1.) Where is the firm now?
  • 2.) Where does the firm want to be in a specified time-frame?
  • 3.) What is the best way to get there (what actions should we take and what are the risks and rewards?
  • This process provides ideas, enable managers to evaluate opportunities, develop and implement plans, and monitor results.
strategic planning process
STRATEGIC PLANNING PROCESS
  • Plan (Corporate, Business, Product)
  • Implement (Organize, Implement)
  • Control (Measure results Analyze, Take Corrective Actions).
  • Mission >>> Objectives & Goals >>> Portfolio Plan >>> Business Plan
strategic planning process1
STRATEGIC PLANNING PROCESS
  • Mission – clear statement providing a sense of opportunity and direction in terms of customer needs, groups and technologies
  • Objectives & Goals – Actionable quantitative and realistic restatement of the mission
  • Portfolio Plan – Analysis of each business unit of analysis in terms of profitability, market share, attractiveness or other relevant measures (BCG Growth/Share Matrix, GE Multifactor Matrix).
strategic planning gap
STRATEGIC PLANNING GAP
  • Kotler identifies the firm’s Strategic Planning Gap as the difference between the actual and desired or expect sales.
  • For change to occur, the gap must be large enough to move the firm to strategic action.
  • Once the gap is recognized management can move to fill the gap (Intensive Growth – action within present product-market scope, Integrative Growth opportunities within firm’s market system, Diversification opportunities outside firm’s marketing system)
growth strategies
GROWTH STRATEGIES
  • Market Penetration (Present markets & Products)
  • Product Development - (Present Markets, New Products)
  • Market Development - (Present Products, New Markets)
  • Diversification (New Products, New Markets)
  • Vertical Integration