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BA460-Week #2: Strategic Planning. “If you don’t know where you are going any route will get you there.” Chris Bartlett, Harvard Business School. Strategic Thinking : The Big-3 Questions:. 1.Where do we want to go? What business(es) should be in Market positions to stake out?
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“If you don’t know where you are going any route will get you there.”Chris Bartlett,Harvard Business School
Strategic Thinking :The Big-3 Questions: 1.Where do we want to go? • What business(es) should be in • Market positions to stake out? • Consumer needs & segments serve? • Outcomes to achieve? 2.Where are we now? 3.How do we get there?
Company Consumers Competitors Conditions You have begun … Situation & SWOT Analysis Internal Strengths & Weaknesses External Opportunities & Threats
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
Your Company • Financial Situation • Margins • Working Capital • Financial Structure • Wealth Creation • Productivity • Marketing Mix
After- SWOT analysis of the situation… the next & most critical step in strategy development…oddly enough is –thinking– Specifically-thinking about the way things have been & are now… AND- the way things could/should be
Need to start thinking abt: We will produce outstanding financial returns by providing totally reliable, competitively superior, global, air-ground transportation of high-priority goods and documents that require rapid, time-certain delivery." Where you want to go? *Your Mission & Vision
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…
Valuable >Strategy & Vision Statements Strategies & Mission Statements http://www.bplans.com/dp/missionstatement.cfm
Then decide-- How you will get there? *Growth, Competitive & Functional Strategies
Corporation Sensors Unit Nano-Tech Unit Cons.Elec. Unit Finance Production Marketing HR / R&D 3 Levels of Strategy Corporate-Level :In what business do we compete? Business-Level: How do we compete? Functional-Level : How do we coordinate?
Corporate Growth Strategy Business Unit Competitive Strategy Functional Strategies R&D Marketing Production Finance Human Resources
Corporation Level 1-Corporate Strategy In which businesses do we compete? Corporation ?
Growth Strategy Deciding on what Products & Markets to compete with & in…
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
MarketPenetration Increase market share among existing customers. MarketDevelopment Attract new customers to existing products Product Development Create new products for present markets Concentrate on your primary line of business & look for ways to meet growth objectives thru increasing your level of operation in your primary business
STRATEGIC BUSINESS UNIT MARKET COMPETITOR COMPETITOR COMPETITOR A B C Level 2: Business Unit Strategy: How do we Compete? Focus? Price? Quality?
w/ what Competitive Advantage • ThruCost Advantage- • Offer comparable benefit as competitor but produced at lower cost • ThruDifferentialAdvantage- • Offer superior benefits to competitor- • w/in which Market Segments • All market segments • Niche segments • Evolving segments
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
Cost: Design, produce, market more efficiently than competitors You can also Formulate Strategy by what dimension you compete on: Differentiation: Deliver unique & superior value in terms of product quality, features, service
You can Formulate Strategy by the- Number & nature of segmentscompete w/in- • Undifferentiated • Differentiated • Niche Strategy
& You can Formulate Strategy by-Riding A Products Life Cycle • Adjust Marketing Mix according to natural Drift of products w/in segments-
Put them all together &… • Cost/Quality Differentiation • Number & nature of segments compete w/in • Riding the Product Life Cycle
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
Competitive Strategy Matrix Broad Mrkt Niche Mrkt Evolving Mrkt Compete on: Cost Product Quality
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
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
An overall cost leader will attempt to be low-cost producer in every segment of the market.
-- seeks to dominate the price sensitive market segments. • --sets prices below all competitors — and still be profitable
Products will be allowed to age & change in appeal from High End, to Traditional, and eventually Low End buyers.
Competitive Strategy Matrix Broad Mrkt Niche Mrkt Evolving Mrkt Compete on: Cost Product Quality
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
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.
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
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
match their ideal criteria for positioning, age, and reliability.
Level 3- Functional Strategy How do we coordinate?
What makes a decision strategic? • Multi-functional in scope & consequences • Requires choice & trade-offs, integration & alignment
In order to execute & achieve selected growth & competitive strategies--Need to coordinate decisions across all Functional domains Production R&D Marketing HR Finance
Getting In-Sync w/ Functional Planning The goal of functional planning is to achieve a state of Internal Strategic Alignment FINANCE PRODUCTION MARKETING
INTERNAL STRATEGIC ALIGNMENT FINANCE Achieved when : All Decisions made by & within all functional areas are in sync w/ one another, As well as with the overall strategic direction of the firm PRODUCTION MARKETING
Functional Planning Matrices Examples of: internal strategic alignment
