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Unformatted text preview: The Nature of Strategic Planning
1 Strategic Planning Strategic planning is the managerial process of matching an organisation's resources with its marketing opportunities over the long run. 2 Strategic Planning Strategic planning is the managerial process of matching an organisation's resources with its marketing opportunities over the long run. Strategic Planning is a total company concept . Requires a long-run orientation. 3 Strategic Planning The organisation should be considered to be a collection of units or subunits having different strategic objectives. These units are collectively considered a `Portfolio'. 4 Strategic Planning The organisation should be considered to be a collection of units or subunits having different strategic objectives. These units are collectively considered a `Portfolio'. Business unit - a reasonably autonomous profit centre. 5 Strategic Planning Business Unit - a division of a company which is a reasonably autonomous profit centre. 6 Strategic Planning Strategy - is a broad, basic plan of action by which an organization inters to reach its goal. Tactic - is an operational means by which a strategy is to be implemented or activated. 7 The Strategic Plan 8 The Strategic Plan
Step 1 Defining the Business - Answers the Question : What business am I in? - E.g., BP, BHP, IBM. 9 The Strategic Plan
STEP 1 A Business Definition must state:
- Product and Market Scope- i.e. which customers are being served, which needs are to be satisfied. - Product and Market Segmentation - determines whether the firm recognizes differences among customers in terms of their needs and satisfaction of those needs. 10 The Strategic Plan STEP 2 Determining the Mission -- state the performance expectations in terms of sales growth, market share, ROI, Net Income or cash Flow. -- careful evaluation of market opportunities and company capabilities along with corporate objectives is required. 11 The Strategic Plan STEP 3 Formulation of Functional Strategies -- individual integrated strategies for marketing, R&D, finance and production. -- department managers are charged with developing strategies using forecasting techniques (e.g.cost/benefit analysis).
12 The Strategic Plan
STEP 4 Budgeting -- The planning cycle ends with the determination of resource allocations and budgets for the strategic business units. 13 The Strategic Plan A Strategic Marketing Plan - is a plan of all aspects of an organisation`s strategy in the market place. -- A Marketing Plan deals with the identification of target markets and the choice of an appropriate product, using the marketing mix. 14 The Analytical Prerequisites to Planning 15 Analytical Prerequisites to Planning Part 1: Customer Analysis -- Segmentation methods and the requirements for each segment 16 Analytical Prerequisites to Planning Part 1: Competitor Analysis -- Identification of competitors and their strategies in your shared markets. 17 Analytical Prerequisites to Planning Part 1: Environmental Trends -- Social, economic, political, technological trends that affect the market must be isolated and forecasted
18 Analytical Prerequisites to Planning Part 1: Market Characteristics -- Evolution of supply and demand and their interaction to determine prices. 19 Analytical Prerequisites to Planning Internal Company Characteristics -- Internal audit to determine strengths and weaknesses compared to market requirements. 20 Portfolio Analysis 21 Portfolio Analysis The Porter Curve - a generic strategies model Porter stated that there are three generic strategies: --1. Overall Cost leadership Produce a standarised product at a low price and under price everyone else. 22 Porter Curve
--2. Differentiation market at a `premium' price something that customers will perceive is higher quality --3. Focus -- concentrate on a small specialty market or segment 23 The Porter Curve
Low ROI Focus Differentiation Cost Leadership Stuck-in-the-Middle ______________________________________
High Market Share 24 Porter Curve Stuck-in-the-Middle does not mean to be at the bottom of the curve but in a position which does not maximize ROI. E.g., Toyota, Lexus 25 The Experience Effect
Total Cost /Unit Company A Company B Cumulative Experience
26 Experience Effect Definitions
Cumulative Experience measures the reduction of total cost/unit with each doubling of the cumulative experience Total Cost/Unit the total costs (variable and fixed) per unit of production 27 Portfolio Analysis The Boston Consulting Group Matrix -- Compares SBUs by number and size of existing and potential marketing advantages. 28 BCG Grid
High Mkt. Growth Rate 2 2 ? 1 Low 3
Lo w Relative Market Share
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This note was uploaded on 06/26/2011 for the course MK 640 taught by Professor Dr. during the Spring '11 term at North Alabama.
- Spring '11