It is the process of developing and maintaining a strategic fit between the organization’s goal and capabilities and its changing marketing opportunities.
Steps in Strategic Planning
Defining a Market-Oriented Mission
A statement of the organization’s purpose-what it wants to accomplish in the larger environment.
Market-oriented mission statement
Defines the business in terms of satisfying basic customer needs.
Companywide Strategic Planning
CompanyProduct-Oriented DefinitionMarket-Oriented Definition Amazon.comWe sell books, videos, CDs, toys, consumer electronics and other products onlineWe make the Internet buying experience fast, easy, and enjoyable— we’re the place where you can find and discover anything you want to buy online DisneyWe run theme parksWe create fantasies—a place where dreams come true and America still works the way it’s supposed to NikeWe sell athletic shoes and apparelWe bring inspiration and innovation to every athlete* in the world (* if you have a body, you are an athlete)
Setting Company Objectives and Goals
Build profitable customer relationships
Invest in research
Increase market share
Create local partnerships
Designing the business portfolio
The collection of businesses and products that make up the company. Portfolio Analysis
The process by which management evaluates the products and businesses making up the company.
Analyzing the Current Business Portfolio
Strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separately from other company businesses Company division
Product line within a division
Single product or brand
1.Identify key businesses (strategic business units, or SBUs) that make up the company 2.Assess the attractiveness of its various SBUs
3.Decide how much support each SBU deserves
A portfolio-planning method that evaluates a company’s strategic business units in terms of their market growth into and relative market share. SBU’s are classified as stars, cash cows, question marks and dogs.
Stars are high-growth, high-share business or products. They often need heavy investment to finance their rapid growth. Eventually their growth will slow down and, they will turn into cash cows. Cash Cows
Cash Cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of cash that the company uses to pay its bills and to support other SBUs that need investment. Question marks
Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it Management needs to think hard about which question marks it should try to build into stars and which should be phased out. Dogs
Dogs are low-growth, low-share business and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.
Problems with Matrix Approaches
Difficulty in defining SBUs and measuring market share and growth Time consuming
Focus on current businesses, not future planning
Developing Strategies for Growth and Downsizing
Product/market expansion grid
A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development or diversification.
The Product/market expansion grid
A strategy for company growth by increasing sales of current products to current market segments without changing the product.
A strategy for company growth by identifying and developing new market segments for current company products....