Principles of Marketing Spring 2014 Instructor : RAZA ILLAHE Lahore Leads University
[ • Strategic Thinking • Value Creation • Profit Impact of Market Strategy (PIMS) - Overview
Strategic Thinking ! • Strategic thinking is the ability to see the total enterprise, to spot the trends and understand the competitive landscape, to see where the business needs to go and to lead it into the future. • The ability to embrace change and ambiguity, and in doing so create something new and different. That, in essence, is strategic thinking.
Strategic Thinking ! • Basis or foundation of strategic thinking is Critical thinking. • Critical Thinking is a skills to solve problems, ask questions, and make decisions. Discuss !
Strategic Thinking Long Term Uncertain Deviating Beyond Linear
Strategic Thinking! In other words ! Integrating the future into your decision making processes today by thinking big, deep and far.
Big – do we understand how we connect and interact with other organisations and the external environment? Deep – how deeply are we questioning our ways of operating? Do we operate from our interpretation of the past, or our anticipation of the future? Are our assumptions today valid into the future? Far – how far into the future are we looking? Do we understand the shape of alternative futures for our organisation?
Thus ,we can say ! • Strategic thinking is identifying, imagining and understanding possible and reasonable future operating environments for your organisation… • …telling how to position your organisation effectively • …and to make better informed decisions about action we take today
Strategic Thinking Puts your attention: • out to the external environment to understand the impact of change, • on connections and interdependencies, • on aligning internal capacity with reality of a constantly changing external environment, • on identifying strategy that will ensure viability of your organisations into the future, and • on the big picture.
Value Creation • So is strategic marketing core role is creation of value? • Does it revolve around value creation process and value outcomes? • Discuss !
Where are we know? • SWOT, PEST, Competitor Analysis etc • PIMS gives a strategic oriented approach to answering above question. • PIMS – Profit Impact of Marketing Strategy
Some 3000 strategic business units (SBUs) have contributed over 25 000 years ’ experience to this database. • PIMS research on what drives business profits has become more widely known over the last 30 years as more evidence has become available.
PIMS • a database of business strategies, used to generate benchmarks and identify winning strategies. • a set of data-derived business strategy principles to guide strategic thinking and strategic measurement. • a methodology for diagnosing business problems and opportunities, and for measuring the profit potential of a business.
The main function of PIMS is to highlight the relationship between a business's key strategic decisions and its results. • Analyzed correctly, the data can help managers gain a better understanding of their business environment, identify critical factors in improving the position of their companies, and develop strategies that will enable them to create a sustainable advantage.
PProfit Impact of Market Strategy (PIMS) • Examining real profits of real businesses suggest that the determinants of business performance can be grouped into four categories 1. Market attractiveness 2. Competitive strength 3. Value-added structure 4. People and organization.
Market Attractiveness :The first category contains factors in the business situation that affect its performance. Customer bargaining power, market complexity, market growth and innovation are obvious examples. • Competitive Strength: describes how a business differs from its competitors in its market situation. Share position, customer preference relative to competitors’offerings, market coverage and product range all have an effect.
Value-Added Structure: quantifies the way a business converts inputs into outputs: it includes investment intensity, fi xed/working capital split, employee productivity, capacity use and vertical integration. • People and Organisation: includes managers ’ attitudes, skill and training mix,personnel policies, and incentives