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Strategic Planning

Strategic Planning. Definition: Strategic Planning=. A series of goal-directed decisions & actions MATCHING your skills & resources (strengths & weaknesses ) w/ market threats & opportunities. EVOLVING MARKET OPPORTUNITIES and/or threats. RESOURCES- & OBJECTIVES. Strategic Planning.

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Strategic Planning

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  1. Strategic Planning

  2. Definition: Strategic Planning= A series of goal-directed decisions & actions MATCHING your skills & resources(strengths & weaknesses) w/ market threats & opportunities

  3. EVOLVING MARKET OPPORTUNITIES and/or threats RESOURCES- & OBJECTIVES Strategic Planning LONG RUN PROFITABILITY AND GROWTH

  4. Where are we- in course?

  5. Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment • Company • Consumers • Competitors • Conditions • PEST Functional Integration • Profits • Mrkt Share • ROA • ROS • ROE • Asset T/O • Stock • Mrkt Cap Marketing Growth &Competitive Strategies R&D Production HR Finance The Big Picture

  6. Consumer Conditions Company Competitors Begun-Step # 1 Situation & SWOT Analysis

  7. Situation & SWOT Analysis answers 1st of 3 Critical Questions: Where are we now- as a company?

  8. Consumers Competitors Conditions You are finding answers re: • How the market is segmented & the relevant criteria that influence consumers use in their purchasing decisions • The nature & magnitude of the competition • Existing & emerging Economic & Technological trends that will impact demand, pricing, product design & positioning

  9. AND-Your Company:

  10. Strategic Planning answers next 2 critical Q’s 2.Where do we want to go? 3.How do we get there?

  11. Corp. Mission & Vision 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?

  12. 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…

  13. 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

  14. “If you don’t know where you are going any route will get you there.”Chris Bartlett,Harvard Business School

  15. 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?

  16. Corporate Growth Strategy Business Unit Competitive Strategy Functional Strategies R&D Marketing Production Finance Human Resources

  17. Corporation Level 1-Corporate Strategy In which businesses do we compete? Corporation ?

  18. Once decided what businesses to compete in –need to decide - what Products & Markets to compete w/& in= Growth Strategy

  19. Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment The Big Picture • Company • Consumers • Competitors • Conditions • PEST Functional Integration Growth &Competitive Strategies • Profits • Mrkt Share • ROA • ROS • ROE • Asset T/O • Stock • Mrkt Cap Marketing R&D Production HR Finance

  20. 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

  21. To Concentrate or Diversify… that is the question…

  22. 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

  23. 2nd Level of Strategy Corporate Level Business unit Level Functional strategy Information systems Research & development Manufacturing Finance Marketing Human resources

  24. STRATEGIC BUSINESS UNIT MARKET COMPETITOR COMPETITOR COMPETITOR A B C Level 2: Business Unit Strategy: How do we Compete? Focus? Price? Quality?

  25. What Advantage can we create & sustain against our competitors? & w/in which Market Segments should we compete?

  26. 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 • Porters Generic Strategies • Strategies & Mission Statements

  27. Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment The Big Picture • Company • Consumers • Competitors • Conditions • PEST Functional Integration Growth &Competitive Strategies • Profits • Mrkt Share • ROA • ROS • ROE • Asset T/O • Stock • Mrkt Cap Marketing R&D Production HR Finance

  28. Cost: Design, produce, market more efficiently than competitors You can Formulate Strategy based on what Competitive advantage you focuson: Differentiation: Deliver unique & superior value in terms of product quality, features, service

  29. You can Formulate Strategy thru your Competitive Scope:Number & Nature of segments compete w/in-

  30. Generic Strategies Competitive Advantage Cost Uniqueness Cost Leadership Broad Differentiation Broadtarget Competitive Scope Focused Cost Leadership Focused Differentiation Narrowtarget

  31. & You can also Formulate Strategy by-Riding a Products Life Cycle • Adjust Marketing Mix according to natural Drift of products w/in segments-

  32. Put them all together &… • Cost/Quality Differentiation • Number & nature of segments compete w/in • Riding the Product Life Cycle

  33. Competitive Strategy Matrix Number & nature of segments compete w/in Ride Product LifeCycle #2 #3 Compete on: Broad Market Niche Mrkt Evolving Mrkt Cost #1 Product Quality

  34. Competitive Strategy Matrix Broad Mrkt Niche Mrkt Evolving Mrkt Compete on: Cost Product Quality

  35. This week’s assignments • Select w/ which of theSix Basic Strategiesyou are going to compete • Draft- your Mission  & Vision statements Determine Functional Tactics & Objectives • Marketing • R&D • Production • HR, TQM • Financial

  36. Cost LeadershipStrategic Choices • A cost leader does not try to be industry innovator • The overriding goal is- increased efficiency & lower costs relative to rivals • Will seek to minimize costs in marketing, R&D & production

  37. Cost Leadership Actions necessary to gain & maintain position: 1. Economies of scale thru utilization of excess capacity. 2. Automation / utilization of robotics in manufacturing processes. 3. Development of efficient distribution networks. 4. Implementation of TQM (Total Quality Management) initiatives. Example: Dell

  38. Business-Level Strategy:Cost Leadership • Advantages • A cost leader is able to charge lower prices • Even at same price more efficient cost leader generates greater profitability

  39. An overall cost leader will attempt to be low-cost producer in every segment of the market.

  40. -- seeks to dominate the price sensitive market segments. • --sets prices below all competitors — and still be profitable

  41. Products will be allowed to age & change in appeal from High End, to Traditional, and eventually Low End buyers.

  42. Competitive Strategy Matrix Broad Mrkt Niche Mrkt Evolving Mrkt Compete on: Cost Product Quality

  43. Generic Business-Level Strategy: Differentiation Create a product that customers perceive as distinct/unique & offer superior quality/service Advantage Customers expect & willing to pay premium prices

  44. Differentiator • Will have significant expenditures in R&D & production….Because you want/need to make high quality/highly desirable product • Will have significant expenditures in marketing… Because you need to create maximum awareness & brand equity.

  45. Differentiation Actions necessary to gain / maintain position: 1. Developing innovative products/services to broad range of customers. 2. Significant investments in R&D. 3. Capability to generate a series of successful new products over time. 4. Development of flexible manufacturing systems. Example: Toyota

  46. Differentiation Advantage … as you develop greater brand equity —thru increased product quality & awareness …. You develop greater brand loyalty…. The greater the loyalty.. the less the price sensitivity

  47. Differentiation: Disadvantages • Difficulty in maintaining long-term distinction in customers’ eyes • Agile competitors can quickly imitate • Difficulty/expense of maintaining premium pricing– requires greater marketing costs

  48. match their ideal criteria for positioning, age, and reliability.

  49. 3rd Level of Strategy Corporate Level Business unit Level Functional Strategy Information systems Research & development Manufacturing Finance Marketing Human resources

  50. Level 3 Functional Strategy How do we coordinate?

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