Corporate and Division Strategic Planning

Topics: Strategic management, Marketing, Management Pages: 9 (2014 words) Published: September 11, 2011


• Corporate and division strategic planning

All corporate headquarters undertake four planning activities:

a. Defining the corporate mission.
b. Establishing strategic business units (SBUs).
c. Assign resources to each SBU.
d. Assessing growth opportunities.

1. Defining the Corporate Mission

Key questions to ask: What is our business? Who is the customer? What is of value to the customer? What will our business be? What should our business be? Mission statements are best when guided by a “vision” that provides direction for the company. [pic]

Good mission statements have three major characteristics:

a. Focused on a limited number of goals.
b. Stresses the company’s major policies and values.
c. Defines the major competitive spheres within which the company will operate by defining the:

o Industry. The range of industries in which a company will operate. Some companies will operate in only one industry; some only in a set of related industries; some only in industrial goods, consumer goods, or services; and some in any industry. o Products and applications. Range of products and applications a company supply. o Competence. The range of technological and other core competencies that a company will master and leverage. o Market-segment. The type of market or customers a company will serve. o Vertical. The number of channel levels from raw material to final product and distribution in which a company will participate. o Geographical. The range of regions, countries, or country groups in which a company will operate.

2. Defining the Business

Redefine the definition of businesses in terms of needs and not products. Table 2.2 gives several examples of companies that have moved from product to market definition of their businesses. A target market definition tends to focus on selling a product or service (Pepsi® and all who drink cola sodas). [pic]

A strategic market definition is broader and more encompassing (Pepsi redefines its strategy to everyone who has a “thirst”). A business can be defined in terms of three dimensions: Customer groups, Customer needs, Technology. General Electric classified its business into 49 strategic business units (SBUs). An SBU has three characteristics:

a. It is a single business or collection of related businesses that can be planned separately from the rest of the company. b. It has its own set of competitors.
c. It has a manager who is responsible for strategic planning and profit performance and who controls most of the factors affecting profit.

Assessing Growth Opportunities

Assessing growth opportunities involves planning for new businesses, downsizing or terminating old businesses. Figure 2.5 illustrates this strategic-planning gap for a major manufacturer of blank compact disks called Musicale.

✓ Intensive Growth

Corporate manager’s first course of action should be a review of opportunities for improving existing businesses. Figure 2.6 shows Ansoff’s “product-market expansion grid.” [pic]
✓ Integrative Growth

Sales and profits may be increased through: Backward integration, Forward integration, and Horizontal integration.

✓ Diversification Growth

When opportunities are found outside the present business and the company has the right mix of business strengths to be successful. Several types are possible: New products that have technological or marketing synergies with existing product lines, New products unrelated to the current industry, New businesses unrelated.

✓ Downsizing and Divesting Older Businesses

Weak businesses require a disproportionate amount of managerial time/talent. Manager should focus on growth opportunities, not fritter away energy and resources trying to salvage haemorrhaging businesses.

3. Organization and Organizational Culture
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