Market-Oriented Strategic Planning

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CHAPTER 4

• Market-Oriented Strategic Planning

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PERSPECTIVES OF THE FIRM

• Objective of the firm is to
• Maximize profits - Economist
• Maximize shareholder value Financial type
• Create customer-satisfying value at a profit -
  Marketing
• Balance the interest of shareholders, customers,
  employees, suppliers, and the community
  Management type.
• These perspectives shape the strategic planning
  process within the firm.

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THE FIRM AS A SYSTEM

• The following are performed
• Coordination, integration, Mutual Purpose, An
  Objective
• Objective of superior customer value at reduced
  cost provides guidance and direction
• Market realities drive the firm

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MARKET ORIENTATION

• There are three behavioral components
• Customer Orientation
• Competitor Orientation
• Inter-functional Coordination
• There are two Decision Criteria
• Long-Term Focus
• Profitability

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STRATEGIC PLANNING

• Developing a game plan for achieving long-run
  objectives based upon existing opportunities and
  resources.
• Strategy should ensure long-run survival and
  growth
• The aim of strategic planning is to develop a
  Sustainable Competitive Advantage (Low Cost,
  Focus, Differentiation, Preemptive Move, Synergy).

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Porters Generic Competitive Strategies
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Porters Competitive Strategies

• Cost Leadership
• Low-cost competitive strategy
• Aimed at broad mass market
• Aggressive construction of efficient-scale
  facilities
• Cost reductions
• Cost minimization

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Porters Competitive Strategies

• Differentiation
• Broad mass market
• Unique product or service
• Charge premiums
• Lower customer sensitivity to price

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Porters Competitive Strategies

• Cost focus
• Low cost competitive strategy
• Focus on particular buyer group or market
• Niche focused
• Seek cost advantage in target market

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Porters Competitive Strategies

• Differentiation focus
• Focus on particular group or geographic market
• Seek differentiation in targeted market segment
• Serve special needs of narrow target market
• Stuck in the middle
• No competitive advantage
• Below-average performance

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STRATEGIC MARKET PLANNING

• With Strategic Planning There Are THREE Key
  Questions
• 1.) Where is the firm now?
• 2.) Where does the firm want to be in a specified
  time-frame?
• 3.) What is the best way to get there (what
  actions should we take and what are the risks and
  rewards?
• This process provides ideas, enable managers to
  evaluate opportunities, develop and implement
  plans, and monitor results.

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Basic Model of Strategic Management

• FOUR BASIC ELEMENTS

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STRATEGIC PLANNING PROCESS

• Plan (Corporate, Business, Product)
• Implement (Organize, Implement)
• Control (Measure results Analyze, Take Corrective
  Actions).
• Mission gtgtgt Objectives Goals gtgtgt Portfolio Plan
  gtgtgt Business Plan

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STRATEGIC PLANNING PROCESS

• Mission clear statement providing a sense of
  opportunity and direction in terms of customer
  needs, groups and technologies
• Objectives Goals Actionable quantitative and
  realistic restatement of the mission
• Portfolio Plan Analysis of each business unit
  of analysis in terms of profitability, market
  share, attractiveness or other relevant measures
  (BCG Growth/Share Matrix, GE Multifactor Matrix).

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STRATEGIC PLANNING GAP

• Kotler identifies the firms Strategic Planning
  Gap as the difference between the actual and
  desired or expect sales.
• For change to occur, the gap must be large enough
  to move the firm to strategic action.
• Once the gap is recognized management can move to
  fill the gap (Intensive Growth action within
  present product-market scope, Integrative Growth
  opportunities within firms market system,
  Diversification opportunities outside firms
  marketing system)

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GROWTH STRATEGIES

• Market Penetration (Present markets Products)
• Product Development - (Present Markets, New
  Products)
• Market Development - (Present Products, New
  Markets)
• Diversification (New Products, New Markets)
• Vertical Integration