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CHAPTER 3

CHAPTER 3. WINNING MARKETS: MARKET-ORIENTED STRATEGIC PLANNING. Important Topics of This Chapter. Characteristics of Corporate Planning: Vision Mission SBU Product Portfolio Models: BCG Model GE Model Strategies for Planning A New Business Business Strategic Planning

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CHAPTER 3

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  1. CHAPTER 3 WINNING MARKETS: MARKET-ORIENTED STRATEGIC PLANNING

  2. Important Topics of This Chapter • Characteristics of Corporate Planning: • Vision • Mission • SBU • Product Portfolio Models: • BCG Model • GE Model • Strategies for Planning A New Business • Business Strategic Planning • The Marketing Process • Contents of A Marketing Plan

  3. CORPORATE AND DIVISION STRATEGIC PLANNING • Defining the Mission: • History • Preferences • Environment • Resources • Distinctive Competencies. • Characteristics of Mission Statements: • Goals • Company policies with suppliers, customers. etc.

  4. CORPORATE AND DIVISION STRATEGIC PLANNING • Characteristics of Mission Statement (cont.): • Competitive scope: • Industry, product, competence, market-segment, vertical, geographical • Establishing Strategic Business Units (SBU): • Single business: • customer group • Satisfies its own set of competitors: • customer needs • Single managers responsible for planning and technology improvements

  5. DIVISION STRATEGIC PLANNING (CONT.) • Assigning Resources to Each SBU: • Boston Consulting Group Model(BCG): • Market share and market growth • Strategies: • Build-increase market share • Hold-maintain market share • Harvest-increasing short-term cash flow • Divest-liquidation. • Mistakes: • expect all SBU will have same growth pattern, • very little cash retained for cash cows.

  6. Analyzing Current SBU’s: Boston Consulting Group Model Relative Market Share High Low • Stars • High growth & share • Profit potential • May need heavy • investment to grow • Question Marks • High growth, low share • Build into Stars/ phase out • Requires cash to hold • market share Market Growth Rate Low High • Dogs • Low growth & share • Low profit potential • Cash Cows • Low growth, high share • Established, successful • SBU’s • Produces cash

  7. DIVISION STRATEGIC PLANNING (CONT.) • The General Electric Model(GE): • Market Attractiveness and Business Strengths. • Critiques of Portfolio Models: • Positives: • help to understand economies of business better • quality of plans may be improved • communication with top management may be improved. • pinpoint information gab • help to eliminate weaker businesses • open opportunities to invest to more profitable businesses. • Negatives: • too mach emphasis to market share, • Can be manipulated to produce desired location • fail to delineate synergy between two or more business.

  8. Business Strength Strong Average Weak C High A Medium D B Low Analyzing Current SBU’s: GE Strategic Business-Planning Grid Industry Attractiveness

  9. PLANNING NEW BUSINESSES • Intensive Growth: • Product/market expansion grit • Market Penetration • Market Development\Product Development • Integrative Growth: • Backward Integration • Forward Integration • Horizontal Integration

  10. Developing Growth Strategies Product/ Market Expansion Grid 1. Market Penetration 3. Product Development Existing Products New Products 2. Market Development Existing Markets 4. Diversification New Markets

  11. PLANNING NEW BUSINESSES • Diversification Growth: • Related industries • concentric diversification • horizontal diversification • Unrelated Industries • Conglomerate diversification • Downsizing Older Businesses: • Pruning.

  12. BUSINESS STRATEGIC PLANNING • Business Vision/Mission • SWOT ANALYSIS: • External Environmental Analysis: • Opportunity and Treat Analysis • Marketing Opportunity-success probability: • Environmental Treat-probability of occurrence: • Ideal business-opportunities are high and treat is low • Speculative business-high on both opportunities and treat • Mature business-low in opportunities and low in treat • Troubled business-low in opportunities and high in treats • Internal Environmental Analysis: • Strength and Weaknesses:

  13. BUSINESS STRATEGIC PLANNING (CONT.) • Goal Formulation: • MBO • Profit (short-term profit or long-term growth) vs. nonprofit goals, or high growth Vs low risk. • ROI • Realistic goals • Strategy Formulation: • Cost Leadership: • learning curve • Differentiation: • service, quality, technology • Focus: • target market

  14. BUSINESS STRATEGIC PLANNING (CONT.) • Strategic Alliances: • product/service alliances • promotional alliances • logistic alliances • pricing collaborations: • airlines,hotels and car rental • Program Formulation: • supporting programs-R&D • Implementation • Feedback and Control

  15. THE MARKETING PROCESS • Value Delivery Process: • Production process: • Strategic Marketing: • Marketing is at the top • segmentation • targeting • positioning • Tactical Marketing • Provide and communicate the value-Japanese approach: • zero Customer feedback • zero product-improvement time • zero purchasing time(JIT) • zero set-up time • zero defects.

  16. THE MARKETING PROCESS (CONT.) • Analyzing Marketing Opportunities: • Marketing research : • Macro/Micro environment • Consumer and business markets. • Developing Marketing Strategies: • Differentiation and positioning • Planning Marketing Programs: • Marketing mix: • Product, Price, Promotion and Place • Managing Marketing Effort: • Implementation of marketing programs

  17. CONTENTS OF MARKETING PLAN • Executive Summary • Current Marketing Situation: • Market • Product • Competition • Distribution • Macro-environment

  18. CONTENTS OF MARKETING PLAN (CONT.) • Opportunity and Issue Analysis: • Opportunities/Treats Analysis. • Strengths/Weaknesses Analysis. • Issue Analysis. • Objectives/Goals: • Financial. • Marketing.

  19. CONTENTS OF MARKETING PLAN (CONT.) • Marketing Strategy: • Targeting, positioning: • product • price • promotion • distribution, service, R&D and marketing research. • Action Programs • Projected Profit-and-Loss Statement • Controls

  20. MARKETING PLANNING IN THE 2000s • Customer and Competitor Oriented • More Realistic • Team Approach • Top Management Involvement • Continuing Process • Cover shorter term (one year and so) • Some Take Seriously, others use as a guideline

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