Developing A Strategic Business Plan Part 1 (Pages 1 36)
…is the managerial process of
developing and maintaining a strategic
fit between the organization's
objectives and resources and its
changing market opportunities.
The Role of Strategy
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.”
“Marketing Strategy is a series of
integrated actions leading to a
sustainable competitive advantage.”
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
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
Examples of Corporate Mission
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
The most abstract level of managerial
How do you define culture?
What is the significance of culture to
How does marketing affect culture in
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
◦ Attainable at some specific future date through
◦ E.g. 10% growth in the next two years
Environmental and internal assessment Strategic definition and implications
• What are the major • What strategy will you
changes in industry pursue over the next 3
dynamics and years?
• What are your • What will be the impact of
competitive strengths major strategic initiatives?
• How does your current • What are the expected
business emphasis fit financial returns of your
with industry strategy?
• What strategic alternatives
have you considered?
cies & strategic
The Usual Business Planning
Business Planning and Delivery
New Information Business
Regional or Sales &
Sales Plan Plan
Vision is a Critical Driver
To succeed in the long
term, our business
needs a vision of how
we will change and
improve in the future. followed and
“without a vision, the
The vision of the
business gives its
energy. Expresses a
Must be fully
◦ It helps motivate us. communicated
◦ It helps set the
direction of corporate
Is motivating Is realistic
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
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
◦ 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
Source: BT Group plc website
Has the Company got a strong
The Business Mission
is important to our
PURPOSE – why
sales & marketing the business exists
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
consistent with the
It provides an incentive to
BEHAVIOUR – the
rules that guide
implement the marketing how we operate
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
- ensuring that the Company resources and
competencies are understood and evaluated
Value Chain Analysis
Core Competence Analysis
SWOT / PEST Analysis
Need to work within Company
Resources & Constraints
• Existing Funds
• New Funds
• R&D & Technical
• Information Technology
• Existing Staff
• Future Staff Requirements
• Training & Development
• Intellectual Property
Objectives - Corporate &
• Examples might include:
Corporate • We aim for a return on investment of at least
• 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
market over the next 6 months
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
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
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.
Primary value chain activities include:
Inbound All those activities concerned with receiving and storing externally sourced
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
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
Support activities include:
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
Steps in a Value Chain Analysis
Break down a market / organisation into its
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
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
Identifying Core Competencies
Prahalad and Hamel suggest three factors to help identify core competencies in any business:
What does the Core
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.
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.”
“If you don’t have a competitive
advantage, don’t compete.”
Jack Welch, GE
Other Characteristics of
◦ Is it substantial enough to make a
◦ Can it be neutralized by competitors
Ability to be leveraged into visible
business attributes that will influence
(Source: Strategic Marketing Management, Aakers)
Seeking Competitive Advantages
Positions of advantage
◦ Superior customer value
◦ Lower relative total cost
◦ Customer satisfaction, Loyalty, Market
Sources of advantages
◦ Superior skills & knowledge, Superior
resources, Superior business process
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?
of business activities How does the entity
• Geographic limits to the reach its target
business? Geographic customers
• Local, regional, multi- Channels
• Which distribution channels
will you use?
international, or global
• What customer segments
can they reach?
• If local, which localities?
Quality and breadth of the product line
• Breadth of the product line?
• Quality of the product line?
• Product bundles or a series of unrelated