Developing A Strategic Business Plan Part 1 (Pages 1 36)

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Developing A Strategic Business Plan Part 1 (Pages 1 36)

  1. 1. Toolbox DEVELOPING A STRATEGIC BUSINESS PLAN
  2. 2. Strategic Planning …is the managerial process of developing and maintaining a strategic fit between the organization's objectives and resources and its changing market opportunities. Resources Strategic Fit Org Objectives Changing Environment
  3. 3. The Role of Strategy Strategy: Corporate •Corporate Operating Mission & •Business Plans Objectives •Functional
  4. 4. Vision and Strategy
  5. 5. Sun Tze on Strategy “Know your enemy, know yourself, and  your victory will not be threatened. Know the terrain, know the weather, and your victory will be complete.”
  6. 6. Strategic Marketing “Marketing Strategy is a series of integrated actions leading to a sustainable competitive advantage.” John Scully
  7. 7. Corporate Mission Broad purposes of the organization   General criteria for assessing the long-term organizational effectiveness  Driven by heritage & environment  Mission statements are increasingly being developed at the SBU level as well
  8. 8. Examples of Corporate Mission SINGAPORE AIRLINES is engaged in air transportation and related businesses. It operates world-wide as the flag carrier of the Republic of Singapore, aiming to provide services of the highest quality at reasonable prices for customers and a profit for the company
  9. 9. Examples of Corporate Mission (cont’d) MARRIOTT’S Mission Statement: We are committed to being the best lodging and food service company in the world, by treating employees in ways that create extraordinary customer service and shareholder value
  10. 10. Corporate Culture The most abstract level of managerial  thinking  How do you define culture?  What is the significance of culture to an organization?  How does marketing affect culture in the organization?
  11. 11. Corporate Objectives & Goals An objective is a long-range purpose  ◦ Not quantified and not limited to a time period ◦ E.g. increasing the return on shareholders’ equity A goal is a measurable objective of the  business ◦ Attainable at some specific future date through planned actions ◦ E.g. 10% growth in the next two years
  12. 12. Strategic planning Goals / Objectives SWOT Analysis Strategy Implementation Measurement and Evaluation
  13. 13. STRATEGIC PLAN DEVELOPMENT Environmental and internal assessment Strategic definition and implications • What are the major • What strategy will you Industry Strategy changes in industry pursue over the next 3 dynamics and articulation dynamics and years? implications resulting opportunities and risks? + + • What are your • What will be the impact of Competitive Strategic competitive strengths major strategic initiatives? assessment initiatives and weaknesses? + + • How does your current • What are the expected Internal Financial business emphasis fit financial returns of your assessment projections with industry strategy? opportunity and competitive + landscape? • What strategic alternatives Risk/contingen- have you considered? cies & strategic alternatives
  14. 14. The Usual Business Planning Hierarchy Vision Mission Objectives Strategies Tactics Plans
  15. 15. Strategic Planning – Many Sub Plans Vision Mission Objectives Strategies Tactics Plans Objectives Strategies Tactics Plans Objectives Strategies Tactics Plans
  16. 16. Framework of a Successful Organisation
  17. 17. Business Planning and Delivery Strategic Plan New Information Business Plan Feed Back Regional or Sales & Industry Marketing Sales Plan Plan State Sales Plans
  18. 18. Vision is a Critical Driver To succeed in the long  term, our business VISION needs a vision of how we will change and Consistently Provides future improve in the future. followed and direction measured “without a vision, the  people perish” The vision of the  business gives its energy. Expresses a Must be fully consumer ◦ It helps motivate us. communicated benefit ◦ It helps set the direction of corporate and marketing strategy. Is motivating Is realistic
  19. 19. Values underpin all we do Values form the foundation of a business’ management style. Values provide the justification of behaviour and, therefore, exert significant influence on  marketing decisions. An example is provided by BT Group - defining its values: BT's activities are underpinned by a set of values that all BT people are asked to  respect: ◦ We put customers first ◦ We are professional ◦ We respect each other ◦ We work as one team ◦ We are committed to continuous improvement. These are supported by our vision of a communications-rich world - a world in which  everyone can benefit from the power of communication skills and technology. A society in which individuals, organisations and communities have unlimited access to  one another and to a world of knowledge, via a multiplicity of communications technologies including voice, data, mobile, internet - regardless of nationality, culture, class or education. Our job is to facilitate effective communication, irrespective of geography, distance, time  or complexity. Source: BT Group plc website
  20. 20. Has the Company got a strong Clear Mission? The Business Mission  is important to our PURPOSE – why sales & marketing the business exists planning It provides an outline of  how the marketing plan should seek to fulfil the mission STRATEGY & VALUES & SCOPE – what CULTURE – what It provides a means of  business are we in management evaluating and screening and how? believes in the marketing plan; are marketing decisions consistent with the mission? STANDARDS & It provides an incentive to  BEHAVIOUR – the rules that guide implement the marketing how we operate plan
  21. 21. quot;Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectationsquot;.
  22. 22. Strategic Audit - ensuring that the Company resources and competencies are understood and evaluated Resource Audit Value Chain Analysis Core Competence Analysis Performance Analysis Portfolio Analysis SWOT / PEST Analysis
  23. 23. Need to work within Company Resources & Constraints Financial • Existing Funds • New Funds Physical • Production • Marketing • Sales • R&D & Technical • Information Technology Human • Existing Staff • Future Staff Requirements • Training & Development Intangible • Goodwill • Reputation • Brands • Intellectual Property
  24. 24. Objectives - Corporate & Functional • Examples might include: Corporate • We aim for a return on investment of at least 15% • We aim to achieve an operating profit of over $10 million on sales of at least $100 million These are objectives that • We aim to increase earnings per share by at concern the business or least 10% every year for the foreseeable future organisation as a whole • Examples might include: • We aim to build customer database of at least Functional 250,000 households within the next 12 months • We aim to achieve a market share of 10% • We aim to achieve 75% customer awareness of Specific objectives for sales & our brand in our target markets • We aim to sell $2m of xyz product into ABC marketing activities market over the next 6 months
  25. 25. Value Chain Analysis Value Chain Analysis describes the activities that take place in a business and  relates them to an analysis of the competitive strength of the business. Michael Porter suggested that the activities of a business could be grouped under  two headings: 1. Primary Activities - those that are directly concerned with creating and delivering a product (e.g. component assembly); and 2. Support Activities, which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake all primary and support activities. Value Chain Analysis is one way of identifying which activities are best undertaken  by our business and which are best provided by others (quot;outsourcedquot;). Linking Value Chain Analysis to Competitive Advantage  What activities a business undertakes is directly linked to achieving competitive  advantage. For example, if we wish to outperform our competitors through differentiating  ourselves through higher quality then we will have to perform our value chain activities better than the opposition. But if we adopt a strategy based on seeking cost leadership this will require a  reduction in the costs associated with the value chain activities, or a reduction in the total amount of resources used.
  26. 26. Primary Activities Primary value chain activities include: Primary Description Activity Inbound All those activities concerned with receiving and storing externally sourced logistics materials Operations The manufacture of products and services - the way in which resource inputs (e.g. materials) are converted to outputs (e.g. products) Outbound All those activities associated with getting finished goods and services to buyers logistics Marketing and Essentially an information activity - informing buyers and consumers about sales products and services (benefits, use, price etc.) Service All those activities associated with maintaining product performance after the product has been sold
  27. 27. Support Activities Support activities include: Secondary Description Activity Procurement This concerns how resources are acquired for a business (e.g. sourcing and negotiating with materials suppliers) Human Resource Those activities concerned with recruiting, developing, motivating and Management rewarding the workforce of a business Technology Activities concerned with managing information processing and the Development development and protection of quot;knowledgequot; in a business Infrastructure Concerned with a wide range of support systems and functions such as finance, planning, quality control and general senior management
  28. 28. Steps in a Value Chain Analysis Break down a market / organisation into its key activities Assess the potential for adding value via cost advantage or differentiation, or identify current activities where a business appears to be at a competitive disadvantage; Determine strategies built around focusing on activities where competitive advantage can be sustained
  29. 29. Core competencies Core competencies are those capabilities that are critical to a business  achieving competitive advantage. The starting point for analysing core competencies is recognising that  competition between businesses is as much a race for competence mastery as it is for market position and market power. Senior management cannot focus on all activities of a business and the  competencies required to undertake them. So the goal is for management to focus attention on competencies that really  affect competitive advantage. Core Competencies are not seen as being fixed. Core Competencies should  change in response to changes in the company's environment. They are flexible and evolve over time. As a business evolves and adapts to new circumstances and opportunities, so its Core Competencies will have to adapt and change. We need to understand what we are good and what makes us better and to  hone these advantages and to develop new ones to underpin the business strategy
  30. 30. Identifying Core Competencies Prahalad and Hamel suggest three factors to help identify core competencies in any business: What does the Core Competence Comments Achieve? Provides potential The key core competencies are those that enable the creation of new access to a wide products and services. variety of markets Makes a significant Core competencies are the skills that enable a business to deliver a contribution to the fundamental customer benefit - in other words: what is it that causes perceived customer customers to choose one product over another? To identify core benefits of the end competencies in a particular market, ask questions such as quot;why is the product customer willing to pay more or less for one product or service than another?quot; quot;What is a customer actually paying for? Difficult for A core competence should be quot;competitively uniquequot;: In many competitors to industries, most skills can be considered a prerequisite for participation imitate and do not provide any significant competitor differentiation. To qualify as quot;corequot;, a competence should be something that other competitors wish they had within their own business.
  31. 31. What is Competitive Advantage? “Competitive advantage is a  company’s ability to perform in one or more ways that competitors cannot or will not match.” Philip Kotler “If you don’t have a competitive  advantage, don’t compete.” Jack Welch, GE
  32. 32. Four Generic Strategies Lower Cost Differentiation Broad Cost Target Differentiation Leadership Scope Differentiation Cost Focus Narrow Focus Target
  33. 33. Other Characteristics of Competitive Advantage Substantiality  ◦ Is it substantial enough to make a difference? Sustainability  ◦ Can it be neutralized by competitors quickly? Ability to be leveraged into visible  business attributes that will influence customers (Source: Strategic Marketing Management, Aakers)
  34. 34. Seeking Competitive Advantages Positions of advantage  ◦ Superior customer value ◦ Lower relative total cost Performance advantages  ◦ Customer satisfaction, Loyalty, Market Share, Profit Sources of advantages  ◦ Superior skills & knowledge, Superior resources, Superior business process
  35. 35. WHERE TO COMPETE? Target customers and segments • Which customers are you trying to target or attract? • Which are you willing to serve, but will not spend resources to attract? • Which would you prefer not to serve? Customers Geographical scope of business activities How does the entity • Geographic limits to the reach its target business? Geographic customers • Local, regional, multi- Channels • Which distribution channels markets local, national, will you use? international, or global • What customer segments player? can they reach? • If local, which localities? Products Quality and breadth of the product line • Breadth of the product line? • Quality of the product line? • Product bundles or a series of unrelated products?

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