Market Oriented Strategic Planning

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Market Oriented Strategic Planning
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the managerial process of maintaining a fit
between the organizations objectives, skills and
resources and its changing market opportunities
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The Nature of High Performing Businesses

• Focus on the needs of all Stakeholders
• Focus on Core business processes
• Identify and develop key resources called core
  competencies
• Develop a functional corporate organization and
  culture

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The Nature of High Performing Businesses -
Stakeholders

• Stockholders
• customers
• employees
• suppliers
• distributors

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A dynamic Relationship Exists among stakeholders
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Core Business Processes

• Departmentalized company vs. concentration on the
  processes within a company
• Departmentalized company focuses on departmental
  interests - The Military
• The army has an air force and the navy has an
  army and an air force

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• Companies that focus on core processes like new
  product development, sales generation or order
  fulfillment, using cross functional teams and
  flat organizations focus on the customers needs

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Resources

• Own those resources that make up the essence of
  the business.
• Do what you do best - a core competency
• a source of competitive advantage
• broad application
• not easily copied

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Organization and Culture

• Pattern, structure and process
• Culture is the shared stories,experiences, norms
  and beliefs of an organization

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Strategic Planning

• Corporate Planning
• Strategic Business Units

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Corporate Strategic Planning

• Mission/Vision Statements
• Establish Strategic Business Units
• Assign Resources
• Identify growth opportunities and needs

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Mission and Vision Statements

• Vision - a view of the future.
• What you want the company to look like in 5yrs.
  10years
• Mission
• Why we are here. Our reason for being

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Missions vs. Strategic Visions

• A strategic vision concerns a firms future
  business path
• The kind of company it is trying to become
• Customer needs to be satisfied in the future

• A mission statement focuses on current business
  activities
• Business(es) company is in now
• Customer needs currently being served

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Establish Strategic Business Units

• A business that is part of a diversified company
• Defined in terms of market rather than product

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Assign Resources
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The Boston Consulting Group Approach

• Market Growth Rate
• Rate of growth of the Market in which the
  division is located
• Relative Market Share
• The market share relative to the largest
  competitor in the market
• Size of the business relative to the rest of the
  businesses in the Company

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Star

• High Growth Rate and high relative market share
  Star
• Strategy is to gain or maintain market share as
  the category grows.
• High requirement for cash to maintain growth
• Amazon.com, America on Line, Microsoft

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Cash Cow

• Dominant position in a slow growing industry.
• Strategy is to fortify and defend its position
• Spend enough cash to maintain position, use
  remaining cash to fund stars
• Proctor and Gamble, Nestles

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Question Mark

• A relatively low market share in a high growth
  industry.
• Strategy is to a portion of the expanding market
  and to overtake the leader
• Requires large amounts of cash for marketing,
  production and systems
• Successful question marks become stars,
  unsuccessful ones become dogs

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Dogs

• A low market share in a low growth industry
• Strategy is turnaround harvest or divest
• Frequently held for sentimental or historical
  reasons
• KE

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Find Growth Opportunities

• Ansoffs Expansion Grid
• Products vs. Markets
• The Strategic Planning Gap
• Intensive growth-penetration or development
• Integrative Growth - Moving up or down the value
  chain
• Diversification

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The Business Unit and Strategic Planning
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SWOT Analysis

• Strengths and Weakness-an internal analysis
• Opportunities and Threats - a strategic
  evaluation of the environment and the competition

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Goals

• Specific
• Time Constrained
• Measurable
• Achievable

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Types of Objectives Required
Financial Objectives
Strategic Objectives

• Outcomes focused on improving a firms
  competitiveness and its long-term business
  position

• Outcomes focused on improving a firms financial
  performance

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Examples Financial Objectives

• Grow earnings per share 15 annually
• Boost annual return on investment (or EVA) from
  15 to 20
• Increase annual dividends per share to
  stockholders by 5 each year
• Strive for stock price appreciation equal to or
  above the SP 500 average
• Maintain a positive cash flow
• Achieve and maintain a AA bond rating

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Examples Strategic Objectives

• Increase firms market share
• Overtake key rivals on quality or customer
  service or product performance
• Attain lower overall costs than rivals
• Boost firms reputation with customers
• Attain stronger foothold in international markets
• Achieve technological superiority
• Become leader in new product introductions
• Capture attractive growth opportunities

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Strategy

• A game plan to achieve goals

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Crafting a Strategy

• Strategy involves determining whether to
• Concentrate on a single business or several
  businesses (diversification)
• Cater to a broad range of customers or focus on a
  particular niche
• Develop a wide or narrow product line
• Pursue a competitive advantage based on
• Low cost or
• Product superiority or
• Unique organizational capabilities

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The Value Delivery Process

• Delivering value to the market at a profit
• Value defined by the customers perception
• It has to start with the customer rather than the
  product
• Discuss figure 3.9 page 85

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The Value Delivery Process

• STP - choosing value
• Detailing the product - Providing Value
• Inform the Market - Sell the product