Organizational Level Strategies
Session 7
Salma Rahman
Business Goals
Goals or objectives convert the organization’s mission
into tangible actions and results that are to be
ach...
Corporate-Level
Strategy
Functional-Level
Strategy
Set of S. Alt. that an
org. chooses from as it
manages its
operations
s...
Organizational Levels of Strategies
• Action plans for each functional area
BUSINESS STRATEGIES
FUNCTIONAL STRATEGIES
CORP...
Organizational Strategic Plans
Organization
Level
Type of Plan Key Strategic Decisions
Corporate Corporate strategic
plan
...
Corporate level strategies
Growth
Strategies
For org’l expansion
along some major
dimensions.
Retrenchment
Strategies
Involves shrinking
operations &...
Growth
Strategies
Diversification Vs Single product
Other Growth Strategies
ACQUISITION (Purchase of all/part of org.)
MER...
Tools for
Analyzing
Corporation and
Strategic choice
of businesses
Identify SBU
After identification of SBUs comes
the cat...
Portfolio Models for Allocating
Resources - BCG MatrixMarketGrowthRate
Relative Market Share
High
High
Low
Low
10%
10x 0.1...
Limitations of Growth Share Matrix
Mkt growth rate – an inadequate descriptor of overall
industry attractiveness
Relative ...
GE MatrixMarketAttractiveness
Business Position or strength
High
Low
Medium
MediumStrong Weak
Business Strength
Low
Business Level Strategies
Portfolio Management
Techniques
Method of analyzing an
organizational mix of SBUs and
matching them with strategic goals.
...
Formulation of Business Level Strategies (How
a particular business competes)
Porter's Generic Strategic Model
Structure-c...
Focus Cost Leadership
Differentiation
No Differentiation
No Cost Leadership
No Focus
Scope of Target MarketNarrow Broad
Lo...
Text Page 27
Rivalry
Customer Bargaining
Power
Threat of
New Entrants
Threat of
Substitutes
Customer
Company
Supplier Barg...
Miles & Snow Typology
Robert Miles and Charles Snow identified another
set of business strategies based on a business’s
in...
Miles & Snow Typology
Culture Response Style
Prospector
Reactor
Defender
Analyzer
Capitalize on Emerging Opportunities
Maintain the Status Quo
R...
Alternative Corporate Growth
Strategies
Market Penetration Strategies
Increase usage rate or users
Product Development
Str...
Alternative Corporate Growth
Strategies - Examples
Market Penetration Strategies Product Development
Strategies
Market Dev...
Product Life Cycle
A concept that provides a way to
trace the stages of a product’s
acceptance, from its introduction
(bir...
Product Life Cycle
1. Like humans, Product also have Life
Cycle.
2. This term is applied to generic category
of product no...
Product Life Cycle
Time
Dollars
Product
Category
Profits
Product
Category
Sales
Introductory
Stage
Growth
Stage
Maturity
S...
Extending the PLC
Change product
Change product use
Change product image
Change product positioning
Introductory Stage
High failure rates Unpredictable conditions
Little competition Not Important
Frequent product modificat...
Growth Stage
Competition Some emulators threatens
competitive advantage of firm
Strategy Market penetrations
Profits From ...
Maturity Stage
Competition Maximum competitors Declining
sales growth and Saturated
markets, Marginal competitors
drop out...
Decline Stage
Competition Few with rapid shake out
Strategy Prepare for removal and milk the brand
Profits Decline as Long...
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MF Strategic Marketing Slides Chapter 1

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MF Strategic Marketing Slides Chapter 1

  1. 1. Organizational Level Strategies Session 7 Salma Rahman
  2. 2. Business Goals Goals or objectives convert the organization’s mission into tangible actions and results that are to be achieved, often within a specified time frame. Three major categories of goals: 1. Production 2. Financial 3. Marketing
  3. 3. Corporate-Level Strategy Functional-Level Strategy Set of S. Alt. that an org. chooses from as it manages its operations simultaneously across several industries & Markets. Set of S. Alt. that an org. chooses from as it conducts business in a particular industry or market. Developed for single functional area. Types Business-Level Strategy Types of Strategic Alternatives:
  4. 4. Organizational Levels of Strategies • Action plans for each functional area BUSINESS STRATEGIES FUNCTIONAL STRATEGIES CORPORATE STRATEGIES • Type of Business to compete in • Competitive position • Resource development • How to compete in a particular market • How to achieve competitive advantage
  5. 5. Organizational Strategic Plans Organization Level Type of Plan Key Strategic Decisions Corporate Corporate strategic plan • Corporate vision • Corporate objectives & resource allocation • Corporate growth strategies • Business-unit composition Business Corporate strategic plan • Market scope • Competitive advantage Marketing Marketing strategic plan Product marketing plan • Target market approach • Marketing mix approach • Specific target market • Specific marketing mix • Execution action plan
  6. 6. Corporate level strategies
  7. 7. Growth Strategies For org’l expansion along some major dimensions. Retrenchment Strategies Involves shrinking operations & eliminating unprofitable ones. Downsizing. Stability Strategies Call for maintaining status Quo. Includes Portfolio Strategies. GRAND STRATEGIES Provide strategic direction at corporate level. Formulation of Corporate Level Strategies
  8. 8. Growth Strategies Diversification Vs Single product Other Growth Strategies ACQUISITION (Purchase of all/part of org.) MERGER (Combination of two firms) JOINT WORKING (Two/ more firms working together) Integration Vertical (Backward & Forward) Formulation of Corporate Level Strategies Internal Growth
  9. 9. Tools for Analyzing Corporation and Strategic choice of businesses Identify SBU After identification of SBUs comes the categorization Formulation of Corporate Level Strategies G E Screen B C G Matrix
  10. 10. Portfolio Models for Allocating Resources - BCG MatrixMarketGrowthRate Relative Market Share High High Low Low 10% 10x 0.1x1x Star Cash Cow Dog Question Mark
  11. 11. Limitations of Growth Share Matrix Mkt growth rate – an inadequate descriptor of overall industry attractiveness Relative Market share - an inadequate descriptor of overall competitive strength Outcomes of growth-share analysis are highly sensitive to variations in how growth and share are measured Lack of guidance on how best to implement investment strategies for each business Model assumes implicitly assumes that all business units are independent of one another except for the flow of cash
  12. 12. GE MatrixMarketAttractiveness Business Position or strength High Low Medium MediumStrong Weak Business Strength Low
  13. 13. Business Level Strategies
  14. 14. Portfolio Management Techniques Method of analyzing an organizational mix of SBUs and matching them with strategic goals. SBU: Strategic Business Unit. Is a division within firm with its own mission, competitors, & strategy.
  15. 15. Formulation of Business Level Strategies (How a particular business competes) Porter's Generic Strategic Model Structure-conduct-performance paradigm Miles and Snow Typology Strategic Orientation Growth strategies Ansoff’s Growth Share Matrix Product Life Cycle Strategies
  16. 16. Focus Cost Leadership Differentiation No Differentiation No Cost Leadership No Focus Scope of Target MarketNarrow Broad Low High Each of the three strategies is based on having a strong Differential Advantage so this factor is not plotted. Porter’s Generic Strategic Model
  17. 17. Text Page 27 Rivalry Customer Bargaining Power Threat of New Entrants Threat of Substitutes Customer Company Supplier Bargaining Power Supplier Company PORTERS FIVE COMPETITIVE FORCES MODEL
  18. 18. Miles & Snow Typology Robert Miles and Charles Snow identified another set of business strategies based on a business’s intended rate of product-market development (new product development, penetration of new markets). They classify business units into four strategic types: prospectors, defenders, analyzers, and reactors
  19. 19. Miles & Snow Typology
  20. 20. Culture Response Style Prospector Reactor Defender Analyzer Capitalize on Emerging Opportunities Maintain the Status Quo Reduce Operating Costs Defend Stable Market, Aggressively Enter Emerging Opportunities as “Second In” Implementation of Miles & Snow Typology
  21. 21. Alternative Corporate Growth Strategies Market Penetration Strategies Increase usage rate or users Product Development Strategies New product category Market Development Strategies Enter new geographical market or market segment Diversification Strategies Develop an entirely new product for an entirely new market Current products New Products Current Markets New Markets
  22. 22. Alternative Corporate Growth Strategies - Examples Market Penetration Strategies Product Development Strategies Market Development Strategies Diversification Strategies Current products New Products Current Markets New Markets • Price reductions • Advertising stressing the many benefits of the product • Packaging in different sized packages • Making it available at more locations • Offering a different version of an existing product: mini-Oreos • Offering a new-improved version of the product: Gillette’s latest improvements in shaving technology •Offering new ways to use an existing product • Arm & Hammer continues to seek new uses for its baking soda • McDonald’s • Philip Morris, originally into cigarettes, diversified into financial services, Post cereals, Sealtest Dairy and Kraft Cheese • Sara Lee acquired Coach Leather Products
  23. 23. Product Life Cycle A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death).
  24. 24. Product Life Cycle 1. Like humans, Product also have Life Cycle. 2. This term is applied to generic category of product not to specific brands. 3. PLC consists of aggregate demand over an extended period of time for all brands in generic product category. 4. Length of PLC varies. 5. PLC is related to a market.
  25. 25. Product Life Cycle Time Dollars Product Category Profits Product Category Sales Introductory Stage Growth Stage Maturity Stage Decline Stage 0
  26. 26. Extending the PLC Change product Change product use Change product image Change product positioning
  27. 27. Introductory Stage High failure rates Unpredictable conditions Little competition Not Important Frequent product modification Standards being Developed Limited distribution Selective Channels as build up takes place Negative profits High marketing and production costs Promotion Strategy Aim at early adopters Promotion Emphasis Awareness and information Sales Promotion Intensive personal selling to channels to stock Full-Scale Launch of New Products
  28. 28. Growth Stage Competition Some emulators threatens competitive advantage of firm Strategy Market penetrations Profits From high prices and Increasing rate of demand Goal is quality and ensuring distribution Distribution Market consolidation through intensive distribution Promotion Strategy Emphasizes brand benefits Emphasis Word of mouth; minimal advert Prices Normally start to fall Sales Promotion Build Brand preference Offered in more sizes, flavors, options
  29. 29. Maturity Stage Competition Maximum competitors Declining sales growth and Saturated markets, Marginal competitors drop out Strategy Defend Brand position extend product line by Stylistic product changes Prices What the market can bear, avoid price war and profits fall Promotion Strategy Use as a vehicle for differentiation Promotion Emphasis Moderate since buyers are aware Heavy promotions To encourage brand switching convert buyers to loyal buyers Market is fragmented Niche marketers emerge Many consumer products are in Maturity
  30. 30. Decline Stage Competition Few with rapid shake out Strategy Prepare for removal and milk the brand Profits Decline as Long-run drop in sales due to declining demand and push up costs Prices Low to permit quick liquidation of Large inventories of unsold items Distribution Selective with unprofitable outlets closed down Promotion Strategy promote low price to reduce stock Emphasis Elimination of all nonessential marketing expenses Rate of decline depends on change in tastes or adoption of substitute products
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