analyzing market opp-strategic planning

8/8/2019 Analyzing Market Opp-Strategic Planning

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Copyright 2003 Prentice-Hall, Inc.

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Strategic Planning Process

Dr. Arvind Kumar Jain

It is More Important To Do What isStrategically Right Than What is

Immediately Profitable.

Kotler

Winning Markets Through Market-Oriented Strategic

Planning.


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Objective:

How is strategic planning carried out at thecorporate & division levels?

How is planning carried out at the businessunit level?

What are the major steps in the marketing

process?How is planning carried out at the productlevel?

What does a marketing plan includes?


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Meaning & Scope:

The strategic Planning provides the route

map for the firm.It is a stream of decisions & actionswhich lead to effective strategies and

which in turn help the firm achieve itsobjectives.


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Strategic Planning: Three Key Areas& Four Organizational Levels.

The strategic planning calls for actionin 3 key areas.*Managing Companys Business as anInvestment Portfolio.

*Involves assessing Business Strengths,considering the markets growth rate &companys position.

*Establishing a strategy.


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Strategic Planning: Three Key Areas& Four Organizational Levels.

OrganizationalLevels

The corporate level.

The division level.

Business unit level.

Product level.

Organizing

Implementing

Measuring result

Diagnosing results

Taking Corrective

Action

PlanningImplementing

Controlling


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A Viable Strategic Planning:

Must have a clearly defined marketMust have a good match betweencorporate strengths and market needsMust have significant positivedifferentiation in the key success factorsof the business


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Corporate Mission:

To define corporate mission, the companyshould address following:

What is our business?

Who is the customer?

What is of value to the customer?What will our business be?

What should our business be?

Simple-soundingquestions areamong the most

difficult thecompany willever have toanswer.

?


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Corporate Mission:

A clear, thoughtful mission statementprovides employees with the shared sense

of purpose, direction and opportunities.The statement guides geographicallydispersed employees to work

independently & yet collectively towardsrealizing the organizations goals.


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Corporate Mission:

Mission statements are at their best whenthey are guided by VISION, an almost

IMPOSSIBLE Dream that provides adirection for the company for the next 10to 20 Yrs.

Eg . Sonys former president, Akio Morita, wanted everyone to have accessto Personal Portable Sound, so his company created the Walkman &Portable CD Player.

Fred Smith wanted to deliver mail anywhere in U.S. before 10:30 AM thenext day, so he created FEDEX.


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Corporate & Division

Strategic Planning:It is done by preparing statement of

mission, policy, strategy and goals,headquarters establishes the frameworkwithin which the divisions & business

units prepare their plans.



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Corporate & Division

Strategic Planning:All corporate headquarters undertake 4planning activities:

Defining the corporate mission.Establishing strategic business units

(SBUS)

Assigning resources to each SBUS.Planning new business, downsizing or

terminating older business.



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Division Strategic Planning:

Strategic Business UnitWhat is a Strategic Business Unit? (SBU)

A set of products or product lines

With clear independence from otherproducts or product lines

For which a business or marketing

strategy should be designed


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Division Strategic Planning:

Strategic Business UnitReliance

Reliance Fabric,Chemicals, Constructions..

Vimal.

Vimal Suttings / Legacy

(Readymade)

Corporate

Division

SBU

Product



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Establishing SBUs:

The purpose of identifying the companysstrategic business units is to develop

separate strategies & assign appropriatefunding.Two of the best known business portfolio

evaluation models are:BCG Model.

G.E. Model.



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Boston Consulting Group (BCG)

Approach:

Question Marks

High growth, low share Build into Stars or phase out Require cash to hold

market share

Stars

High growth & share Profit potential May need heavy

investment to grow

Cash Cows

Low growth, high share Established, successful

SBUs Produce cash

Dogs

Low growth & share Low profit potential

Relative Market ShareHigh Low

?



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The General Electric Model (G.E):

Business Strength

High

Medium

Low

Strong Average Weak

A

D

C

F

Invest / Grow Selectivity / Earnings Harvest / Divest

Strategies:

B

E

GH I



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The G.E Strategies:

High Medium Low

High

Medium

Low

Market Attractiveness

Invest/Grow Invest/Grow

Invest/Grow

Selectivity/Earnings



Harvest/DivestHarvest/Divest

Harvest/Divest


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G.E. Model: Strategies

Position D:Build Selectively:

Invest heavily in most attractive segments.Build up ability to counter competition.Emphasize profitability by raising productivity.



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Position E:Selectivity / Manage for Earnings:

Protect existing program.Concentrate investments in segments where profitability isgood and risks are relatively low

Position F:Limited Expansion or Harvest:

Look for ways to expend without high risk; otherwise,minimize investment & rationalize operations.



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Position G:Protect & Refocus:

Manage for current earnings.Concentrate on attractive segments.Defend strengths.



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Position H:Manage for Earnings:

Protect position in most profitable strengths.Upgrade product line.Minimize investment.

Position I:Divest:

Sell at time that will maximize cash value.Cut fixed costs & avoid investment meanwhile.



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Strategic-Planning Gap:

The companys plans for its existingbusiness allow it to project total sales &

profits.Often these are less than what corporatemanagement wants them to be. If there isa gap between future desired sales andprojected sales, corporate managementwill have to develop or acquire newbusiness to fill it.



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Product-Market Exp. Grid:

Ansoffs Product -Market Expansion Grid


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STARBUCKS: Started its operations in Seattlein 1970s as a gourmet Coffee Retailer for localcoffee lovers.

In 1982 Howard Schultz, CEO, identifiedunfilled niche for Cafes Serving gourmet coffeedirectly to customers & helped the Co. inattaining loyal customer base in Seattle.


Market Penetration Strategy:The company first consider whether it

could gain more market share with itscurrent products in their current markets


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Market Development Strategy:The Company considers whether it can find

or develop new markets for its currentproducts

STARBUCKS: Started its operations in Seattlein 1970s as a gourmet Coffee Retailer for localcoffee lovers.

Expended its operations in the cities of Northwest, then throughout North America andfinally across the globe.


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Product Development Strategy:Further, the company considers to developnew products of potential interest to itscurrent market.

STARBUCKS: Introduce new merchandiseincluding compilation CDs and JOE Lifestylemagazine.


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Product Diversification Strategy:The company develop new products fornew market

STARBUCKS: Diversified into grocery storesaisles with Frappuccino bottled drinks,

Starbucks brand ice cream, and thepurchase of tea retailer Tazo Tea..


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Integrative Growth Opportunities:It is to identify opportunities to build oracquire businesses that are related tocurrent business.

Backward Integration:

Acquire one or more suppliers to gain morecontrol or generate more profits


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Forward Integration:Acquire some wholesalers or retailers,especially if they are highly profitable

Horizontal Integration:

Acquire one or more competitors.


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Diversification Growth Opportunities:It is to identify opportunities to add

attractive businesses that are unrelated tocurrent businessConcentric Diversification:

A company starts manufacturingComputer Tapes as it know how to makeAudio Tape.


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Horizontal Diversification Strategy:The company might search for newproducts that could appeal to currentcustomers (it might be technologicallyunrelated). Eg. Manufacturing Cassette

holding tray, besides Tapes.


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Conglomerate Diversification Strategy:The company might seek new businessesthat have no relationship to its currenttechnology, products or markets.

Eg. Business of making software besides

having existing business of Tapes.


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Downsizing Older Business:Companies must not only develop newbusinesses, but must also carefully prune,harvest, or divest tired old business in olderto release needed resources and reduce

cost.


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Business Unit Strategic

Planning:Internal Analysis company; capability etc.

External Analysis customers, market definition, industrystructure

SWOT Analysis

Strengths, Weaknesses, Opportunities &ThreatsIdentify & prioritize major problems andopportunities: selection of key issues

Based on the firms core competencies, decideon future options


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SWOT Analysis:

Strengths:Strengths can be intangible: Good

leadership, strategic insights, customerintelligence, solid reputation, high skilledworkforce

Often considered Core Competencies Best leverage points for growth withoutdraining your resources


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SWOT Analysis:

Weaknesses:Weaknesses Those things that prevent you

from doing what you really need to doSince weaknesses are internal, they arewithin your control


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SWOT Analysis:

Weaknesses:Weaknesses include: Bad leadership,

unskilled workforce, insufficient resources,poor product quality, slow distribution anddelivery channels, outdated technologies,

lack of planning, . . .


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SWOT Analysis:

External Environment (Opportunity &Threat) Analysis:

Macro-environmental forces: Demographic, Economic,Technological, Political-Legal & Social Cultural)

Micro-environmental forces: Customers, Competitors,Distributors, Suppliers.


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SWOT Analysis:

Opportunities:Opportunities Potential areas for growth

and higher performanceExternal in nature marketplace, unhappycustomers with competitors, better

economic conditions, more open tradingpolicies, . .


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SWOT Analysis:

Opportunities:Internal opportunities should be classified

as StrengthsTiming may be important for capitalizing onopportunities


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Opportunities:


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SWOT Analysis:

Threats:Threats Challenges confronting the

organization, external in natureThreats can take a wide range bad presscoverage, shifts in consumer behavior,

substitute products, new regulations, . . .


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SWOT Analysis:

Threats:May be useful to classify or assign

probabilities to threatsThe more accurate you are in identifyingthreats, the better position you are for

dealing with the sudden ripples of change


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Threats:


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Business Strategic-Planning

Process:


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Strategic Formulation:

Michel Porters Generic Strategies: Providesa good starting point for strategic thinking:

Overall Cost Leadership Differentiation

Focus

E.g:Travelocity.Com: IS pursuing a differentiation strategyby giving Comprehensive range of services to thetraveler.

Lowfare.Com: Is pursuing Lowest cost strategy.

Lastminute.Com: Is pursuing Niche / Focus Strategy


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Strategic Formulation:

McKinsey 7-S Framework:According to McKinsey & Co.; Strategy is only one of 7

elements in successful business practice.Structure

SystemStrategy

Skills

SharedValues

Staff

Style

Strategy, Structure & System:are considered the hardwareof success.

Style, Skills, Staff & SharedValues: are considered assoftware's.


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The Marketing Process:

Planning at the corporate, division &business unit levels is an integral part of the

marketing process in business.

How Company defines its

Business??....

The task of any business is to deliver customer value at PROFIT.


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Value-Delivery Process:


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Improving Value Delivery The

Japanese Way:

0 customerfeedback time

0 productimprovement time

0 setup time

0 defects0

purchasing time


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Steps in Planning Process:

Analyzing Market Opportunities.

Developing Marketing Strategies.

Planning Marketing Programs.


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Planning Process:

TargetConsumers

Product

Place Price

Promotion

Competitors

MarketingIntermediarie

s

PublicsSuppliers

Demographic-Economic

Environment

Technological-Natural

Environment

Political-Legal

Environment

Social-Cultural

Environment

Successful Companies


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Successful Companies Should Know How To Adopt To A Continuously Changing Market Place .

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analyzing market opp-strategic planning

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