Strategic planning process is the same regardless if a companys business

Strategic planning process is the same regardless if

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Strategic planning process is the same regardless if a company’s business portfolio consists of only one or two operations:oFirst, company must analyze its current business portfolio and determine which businesses should receive more, less, or no investmentoSecond, it must shape the future portfolio by developing strategies for growth and downsizing Analyzing the Current Business Portfolio Portfolio analysis:process by which management evaluates the products and businesses that make up the company The company will want to put strong resources into its more profitable businesses and phase down or drop its weaker ones Management’s first step is to identify the businesses that make up the company, called strategic business units (SBUs)oAn SBU can be a company division, product line within a division, or sometimes a single product or brandThe company next assess the attractiveness of its various SBUs and decides how much support each deserves When designing a business portfolio, it’s a good idea to add and support products and businesses that fit closely with the firm’s core philosophy and competencies Purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment The most standard portfolio analysis methods evaluate SBUs on two important dimensions:oThe attractiveness of the SBU’s market or industry oThe strength of the SBU’s position in that market or industry
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Best-known portfolio-planning method was developed by the Boston Consulting Group, a leading management consulting firm The Boston Consulting Group Approach Grow-share matrix:a portfolio-planning method that evaluates a company’s strategic business units (SBUs) in terms of its market growth rateand relative market share. SBUs are classified as stars, cash cows, questions marks, or dogs Stars:oHigh-growth, high-share businesses or productsoOften need heavy investments to finance their rapid growth oEventually their growth will slow down, and they will turn into cash cows Cash Cows:oLow-growth, high-share businesses or products oThese established and successful SBUs need less investments to hold their market share oThey produce a lot of cash that the company uses to pay its bills and support other SBUs that need investment Question Marks:oLow-share business units in high-growth markets oThey require a lot of cash to hold their share, let alone increase it oManagement has to think hard about which question marks it should try to build into stars and which should be phased out Dogs:oLow-growth, low-share businesses and products oMay generate enough cash to maintain themselves but do not promise to be large sources of cash Once it has classified its SBUs, the company must determine what role each will play in the futureThe company can invest more in the business unit to build its share oOr it can invest just enough to hold the SBU’s share at the current level
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