Marketing Strategy –Strategic Position Assessment

Topics: Marketing, Microeconomics, Strategic management Pages: 7 (1914 words) Published: October 31, 2011
Marketing Strategy –Strategic Position Assessment

Strategic position assessment: provides the basic information about the sources of value in the business and the drivers that create value in the business. The SPA should be done at two levels: The corporate level should focus on the value potential of the company’s portfolio of businesses. The unit level should focus on the value and drivers of the individual markets and products. Each business is assigned one for the five strategic objectives: 1. Divest: closed or sold

2. Harvest: capable of generating healthy CF with limited growth opps. 3. Maintain: mature markets with acceptable share and further share-building activities do not generate a (+) NPV. 4. Growth: positioned in attractive market where they posses competitive advantage 5. Enter: new growth opps.

Assessing the current position:

1. Weaknesses of financial measures: do not give reliable indicators on whether current performance is creating long-term value a. Company-level: most measures fall short in providing an indicator of long-term performance. b. Unit-level: can be even more misleading because they encourage deceptive comparisons across business units 2. Strategic value drivers: those organizational capabilities that have the most significant impact on the firm’s ability to create SV. These drivers shape a company’s ability to create and retain competitive advantage. c. To measure whether value is being created in any one year management must: i. Identify those org variables that are critically affecting competitive advantage and long-term cash flow. ii. Set target level performance on these

iii. Measure performance achieved and compare to targets 3. Identifying value drivers:
d. Should be a current asset or capability that has an impact on long-term value e. Should be capable of being measured and communicated f. Should be capable of being influenced by management actions 4. Target level of performance: benchmark performance against a peer group or other companies the business aspires to emulate 5. Measuring performance: targets set and individuals and groups have to be assigned responsibility

The Balanced Scorecard: performance and plans cannot be built around a single measure such as return on capital or EPS but need a set of indicators to track performance and ensure that managers are achieving on the drivers of long-term performance

1. Financial perspective
a. Return on capital employed
b. Operating margins
c. EVA
d. Cash flow
e. Sales growth
2. Customer perspective
f. Market share
g. Brand image and awareness
h. Customer satisfaction
i. Customer retention
j. Customer acquisition
k. Ranking by key accounts
3. Internal business perspective
l. % of sales from new products
m. Manufacturing costs
n. Manufacturing cycle time
o. Inventory management
p. Quality indices
q. Technological capabilities
4. Innovation and Learning perspective
r. Product development
s. Purchasing
t. Manufacturing
u. Technology
v. Marketing and Sales

Exploring the portfolio: performance needs to be broken down into smaller units than the aggregate to identify winners and losers (Pareto 80/20) and the profit waterfall (total economic profit v capital invested)

Explaining the current position: analysis begins with the basic economic proposition that there are two basic ways in which a business can earn profits that exceed its cost of capital. One is to find attractive markets where competition is weak which allows the firm to earn monopoly profits. The other is to possess unique resources or assets that enable the business to create a competitive advantage in the form of lower costs or a superior offer. These are called Ricardian...
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