Strategic Planning is the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities.
It involves defining a clear company mission, setting supporting objectives, designing a sound business portfolio and coordinating functional strategies.
Strategic Planning set the stage for the rest of the planning in the firm. It involves defining a clear company mission, setting supporting company objectives, designing a sound business portfolio and coordinating functional strategies. At corporate level the company first defines its overall purpose and mission.
An organization exists to accomplish something. Mission statements of the organizations purpose what it wants to accomplish in the larger environment.
When the management senses that the organization is drifting it must renew its search for purpose.
Mission statements ask;
□ What is our business?
□ Who is the customer?
□ What do consumers value?
□ What should our business be?
Mission statement should be;
□ An invisible hand that guides people in organization
□ Neither too narrow nor too broad
□ Fitting of market environment
□ Based on distinctive competencies (Why we are better from others? Some plus points, etc) □ Motivating
Mission Statement of Some Companies
CompanyProduct OrientedMarket Oriented
RevlonWe make cosmeticsWe sell life style, expressions, success & status
DisneyWe run theme parksWe provide fantasies and entertainment
a place where America still works the way it’s
Wall-MartWe run discount storesWe offer product & services that deliver value to middle Americans
DESIGNING THE BUSINESS PORTFOLIO
Portfolio is the collection of items. A business portfolio is the collection of business & products that makeup the company. The best business portfolio is one of the best fits the company strength & weakness to opportunities in environment.
Analyzing the cureent business portfolio:
A tool by which management identifies and evaluates the various businesses that makes up the company. The company will want to put strong resources into its more profitable business and phase down or drop its weaker ones.
Strategic Business Unit-SBU:
It is a unit of company that has a separate mission and objective and that can be planned independently from other company business. An SBU can be company division, a product line within a division, or sometimes a single person or brand.
“The next step in the business portfolio analysis calls for management to assess the attractiveness of its various ‘sbu’ and decide how much support each deserves. The 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 Boston Consulting Group Approach:
The Boston Consulting Group Approach a company classifies all its SBUs according to growth share matrix.
Growth Share Matrix:
A portfolio planning that evaluates a company’s strategic business unit in terms of their market growth rate and relative market share. SBUs are defines as;
1: Stars: These are high growth, high share business or products. They often need heavy investment to finance their rapid growth. Eventually their growth will slow down they will become cash cows. 2: Cash Cows: These are low growth, high share business or products. These established and successful SBUs need less investment to hold their market share. 3: Question Marks: These are low-share business unit in high growth markets. They require a lost of cash to keep their share, let alone increase it. Management should think whether to invest more on it or...