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BA343 Week#4

Strategic Planning. BA343 Week#4. Finish Situation Analysis- Explain SWOT Analysis Define & Demo Strategic Planning Company Analyses ( ie-GE & BCG ) Delineate the 3 levels Strategy Corporate level-Growth Strategy Business level-Competitive Strategy Functional Level- Strategic Alignment.

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BA343 Week#4

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  1. Strategic Planning BA343 Week#4

  2. Finish Situation Analysis- • Explain SWOT Analysis • Define & Demo Strategic Planning • Company Analyses (ie-GE & BCG) • Delineate the 3 levels Strategy • Corporate level-Growth Strategy • Business level-Competitive Strategy • Functional Level- Strategic Alignment

  3. 2 weeks ago started the Situation Analysis— …w/ the Environmental Scan Environmental Scanning= The process of identifying the nature & magnitude ofUncontrollable forcesin the external (macro) environmentexerting significant influenceon our strategies…

  4. Consumer Conditions Competitors So far…determined • How to segment the consumer market, measure demand & relevant factors that influence consumers’ purchasing decisions • Your competitors relative market positions, competencies & advantages • Macro-E political-legal, economic, socio-cultural & technological trends relevant to your organization

  5. Final Component of Situation Analysis G N C Service TGT D E WM F • Company • Consumers • Competitors • Conditions • PEST Growth, Competitive & Positioning Strategies P’s Strategic Planning Situation Analysis Marketing Strategy The Marketing Mix:

  6. Company Considerations • History / Culture • Resources • Existing portfolio • Existing customer base • characteristics • loyalty • Experience • w/markets • w/ marketing

  7. Company Portfolio Analysis Analyze company’s products w/ respect to: • How good your product is…. • How good the market you sell it in is…

  8. G.E Strategic Planning Model Business Strength Strong Average Weak High Low Industry Attractiveness Business Strength IndexIndustry Attractiveness Index * Market Share * Market size * Price Competitiveness * Market Growth * Product Quality * Industry Profit Margin * Customer Knowledge * Amount of Competition * Sales Force and Effectiveness * Seasonality * Geographic Advantage * Cost Structure

  9. STARS PROBLEM CHILD CASH COWS DOGS Boston Consulting Group’s Growth-Share Matrix High Product-Market Growth (%) Low 10x 4x 2x 1.5x 1x .5x .2x.1x Relative Market Share High Low

  10. MARKET SHARE DOMINANCE HIGH LOW MARKET GROWTH RATE LOW HIGH BCG Portfolio Matrix High growth Market leaders Require cash Large profits High growth Low market share Need cash Poor profit margins Low growth High market share High cash flow $ Low growth Low market share Minimal cash flow

  11. G N C Service TGT D E WM F • Company • Consumers • Competitors • Conditions • PEST Growth, Competitive & Positioning Strategies P’s Strategic Planning Situation Analysis Marketing Strategy The Marketing Mix:

  12. S Things the company does well. W Things the company does not do well. O Conditions in the external environment that favor strengths. T Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness. SWOT Analysis Internal External

  13. Strengths and Weaknesses (INTERNAL) SWOT Analysis • Production Costs • Marketing Skills • Employee Capabilities • Financial Resources • Available Technology • Company/Brand Image

  14. Opportunities And Threats EXTERNAL SWOT Analysis • Social • Demographic • Economic • Technological • Political/Legal • Competitive

  15. G N C Service TGT 1st Step D E WM F P’s 2nd Step Strategic Planning Situation Analysis Marketing Strategy The Marketing Mix: • Company • Consumers • Competitors • Conditions • PEST Growth & CompetitiveStrategies Positioning Strategy

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

  17. EVOLVING MARKET OPPORTUNITIESand/or threats RESOURCES & OBJECTIVES Strategic Planning LONG RUN PROFITABILITY AND GROWTH

  18. Strategic Planning answersthe 3 Big Questions: 1.Where are we now? 2.Where do we want to go? 3.How do we get there?

  19. Consumer Conditions Company Competitors The Situation & SWOT Analysis Answers the 1st Question: Where are we now…

  20. Org. goals & objectives encapsulated in Mission & Vision Statement answers 2nd Question: 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?

  21. 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…

  22. Build a Strategic Framework: Mission Statement Vision Valuable >Part 1: Strategy & Vision Statements >Part 2: Mission Statements

  23. Mission Statement 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."

  24. “PepsiCo’s overall mission is to increase the value of our shareholders’ investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.”

  25. Avoid Corporate Myopia Short sightedness by firms that define their business too narrowly

  26. Marketing Myopia Examples Broad Description: • Transportation Co. • Power company • Entertainment provider Myopic Description: • Railroad company • Electricity company • Television network

  27. Market Oriented Vision / Missions PRODUCT-ORIENTED VISION/MISSION STATEMENTS MARKET-ORIENTED VISION/MISSION STATEMENTS COMPANY RevlonWe make cosmetics. DisneyWe run theme parks. Philip Morris We Sell Cigarettes We sell hope…we accent a lifestyle & self expression; We make people happy.. by providing fantastic experiences & entertainment We provide “Life's Simple Pleasures.

  28. 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

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

  30. 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?

  31. Corporation Level 1Corporate Strategy In which businesses should we compete? Corporation ?

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

  33. G N C Service TGT D E WM F P’s Strategic Planning Situation Analysis Marketing Strategy The Marketing Mix: • Company • Consumers • Competitors • Conditions • PEST Growth & CompetitiveStrategies Positioning Strategy

  34. 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

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

  36. 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

  37. Diversification new products… new markets… new alliances Or Diversify…

  38. Or Diversify… P R O D U C TS Present New Market Penetration ProductDevelopment Present M A R K E TS Diversification Market Development New

  39. Related Diversification • Related Diversification • if opportunities exist to: • Transfer expertise/ capabilities/ technology • Combine related activities into single operation & reduce costs • Leverage use of firm’s brand name reputation Product Similarities Operational Skills-Capabilities Customer Profile Similar Technology Distribution Channels

  40. Examples of Related Diversification • Darden Restaurants • Olive Garden • Red Lobster • Bahamas Breeze • Johnson & Johnson • Prescription drugs • Non-prescription drugs (Tylenol, pepcid AC) • Band-aids • Baby products • PEPSICO • Soft drinks • Fruit Juices • Snack foods (Fritos, Lays, Cracker Jacks)

  41. Unrelated Diversification Involves diversifying into businesses with • No strategic fit • No meaningful value chain relationships • No unifying strategic theme • Approach is to venture into “any businessin which we think we can make a profit” • Firms pursuing unrelated diversification are often referred to as conglomerates

  42. Diversification via-Merger & Acquisition • A popular approach to diversification- altho only ~20% succeed --M&A activity in 2004 was worth more than $1 trillion Advantages • Quicker entry into target market • Easier to hurdle certain entry barriers • Technological inexperience • Gaining access to reliable suppliers • Being of a size to match rivals in terms of efficiency and costs • Getting adequate distribution access

  43. Diversification via-Joint Ventures&Strategic Alliances Good way to diversify when: • Uneconomical/ risky to go it alone • Pooling competencies for more competitive strength • Foreign partners needed to surmount • Import quotas and Tariffs • Nationalistic political interests • Cultural roadblocks • Lack of knowledge about markets in particular countries

  44. 2nd Level of Strategy Corporate Level Business unit Level Functional strategy Information systems Research & development Manufacturing Finance Marketing Human resources

  45. Level 2: Business Unit Strategy How do we compete? Cost? Quality? Focus?

  46. G N C Service TGT D E WM F P’s Strategic Planning Situation Analysis Marketing Strategy The Marketing Mix: • Company • Consumers • Competitors • Conditions • PEST Growth & CompetitiveStrategies Positioning Strategy

  47. 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

  48. Cost: Design, produce, market more efficiently than competitors • Focus • = Competitive Scope/ Breadth of company’s target market Differentiation:Deliver unique & superior value in terms of product quality, features, service Generic Competitive Strategies

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