2. CORPORATE/DIVISIONAL STRATEGIC
PROCESS
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DEFINING CORPORATE MISSION
ESTABLISHING SBUs
RESOURCE ALLOCATION TO EACH SBU
PLANNING NEW BUSINESS
EXITING OLD ONES
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DEFINING CORPORATE MISSION
A CLEARLY DEFINED MISSION STATEMENT SPELLS OUT THE
BASIC OBJECTIVE FOR WHICH COS EXIST
MUST SPELL OUT WHO ARE THE CUSTOMERS VALUE
PROPOSITION IN MIND FOR THEM
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3. THE FACTORS EFFECTING MISSIONS
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HISTORY/BACKGROUND
CURRENT TRENDS
RESOURCES
BASIC DISTINCT STRENGTH
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THE MISSION STATEMENT SHOULD BE COMMUNICATED
DOWN THE LINE. IT SHOULD FOCUS ON
I)CLEARLY DEFINED LIMITED GOALS
II)POLICIES
III)DEFINE COMPETITIVE SCOPE PARAMETES WITHIN WHICH
IT WILL OPERATE
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4. COMPETITIVE SCOPE
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-RANGE OF INDUSTRIES
-PRODUCTS RANGE/APPLICATION
-RANGE OF COMPETENCIES
-MARKET SEGMENT SCOPE
-GEOGRAPHICAL SCOPE
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MISSION STATEMENTS SHOULD NOT BE REVISED EVERY
FEW YEARS IN RESPONSE TO ECONOMIC UPS/DOWNS
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IF, HOWEVER,THE MISSION HAS OUTLIVED ITS CREDIBILITY
OR CANNOT DEFINE AN OPTIMAL COURSE FOR THE CO,
THEN IT NEEDS TO BE REVISED.
5. ESTABLISHING STRATEGIC BUSINESS
UNITS
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AN SBU HAS THE FOLLOWING CHARACTERISTICS
-COLLECTION OF SINGLE BUSINESS/COLLECTION OF
RELATED BUSINESS GENERALLY PLANNED SEPARATELY
FROM REST OF THE CO
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-IT HAS ITS OWN SET OF COMPETITORS
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-HAS AN INDEPENDENT MANAGER WHO IS ACCOUNTABLE
FOR PERFORMANCE&PROFITS
RESOURCE ALLOCATION TO SBUs
THE PURPOSE OF MAKING SBUs IS TO IDENTIFY
SUCCESSFUL STRATRGIES FOR EACH SBU AND ALLOCATE
RESOURCES ACCORDINGLY.
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6. BCG MATRIX
MARKET GROWTH /SHARE MATRIX
(Build)
(Hold)
Market
Growth
Rate
High
STARS
QUESTION
MARKS
CASH COWS DOGS
(Divest)
Low
(Harvest)
High
Low
MARKET SHARE
7. • This framework assumes that increase in market share leads to
an increase in cash due to experience curve.
• Another assumption that growing market needs additional cash
to expand its capacity.
• THUS THE POSITION ON BCG INDICATES ITS CAPACITY
TO GENERATE CASH
• BCG matrix reasons that cash for business can be obtained
from other businesses
• By investing in a growing market the co can become a market
leader by virtue of experience curve.
8. • Question Marks
• Have low market share/ high growth rate. Because of high
growth rate consume a lot of cash. Because of low market
share produce low cash. Hence, cash consumption is high.
Often referred to as “problem child”
• Stars
• Have high growth rate/ market share.
• Cash Cows
• A leader in mature market, cash cows give a return higher on
assets than market growth rate.Such business should be
“milked” with as little investment as possible.
• Dogs
• With low market share in a low growth , they do not
generate any cash. They are basically cash traps.
9. GE MATRIX
Business Unit Strength
Medium
High
Medium
Low
High
High
Protect
Position
Invest To
Re-build
Build
Selectively
Medi
um
Build
Selective
ly
Selectivity Ltd
Low
Protect/
Refocus
Manage
For
earnings
Low
Market
Attractiveness
High
Mediu
m
Low
Expansion/
Harvest
Divest
10. GE MATRIX-Contd/•
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The GE model is more sophisticated than BCG in three major
aspects
a) Market Attractiveness replaces growth rate
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b) Competitive Strength replaces market share
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C) GE is a 3X3 grid while BCG is a 2X2 grid.
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Factors effecting Market Attractiveness
Mkt size
Mkt growth rate
Mkt profitability
Pricing trends
Competitive intensity/rivalry
Overall risk of return in the industry
Entry barriers
13. INTENSIVE GROWTH
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IN THIS STRATEGY THE CO EXAMINES ALL THE POSSIBLE
GROWTH AREAS
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-INCREASING MKT SHARE WITH EXISTING PRODUCTS
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-DEVELOPING MORE MKTS FOR EXISTING PRODUCTS
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-DEVELOPING NEW PRODUCTS FOR ITS EXISTING MKTS
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-ADDING ATTRACTIVE BUSINESSES UNRELATED TO ITS
PRESENT BUSINESS
14. INTEGRATIVE GROWTH
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INTEGRATING WITH OTHER BUSINESS TO INCREASE THE
COS EARNINGS
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-FORWARD INTEGRATION
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-BACKWARD INTEGRATION
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-HORIZONTAL INTEGRATION
15. DIVERSIFICATION
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DIVERSIFICATION IS DESIRABLE WHEN MORE ATTRATIVE
OPPORTUNITIES EXIST OUTSIDE THE PRESENT BUSINESS
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-THE INDUSTRY SEGMENT BEING PLANNED TO ENTER MUST
HAVE GROWTH POTENTIAL
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-THE CO MUST HAVEEXPERTISE IN THE AREA
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A CO CAN DIVERSIFY BY
i) OFFERING NEW PRODUCTS TO EXISTING CUSTOMERS
ii) OFFERING NEW PRODUCTS TO NEW CUSTOMERS
iii) VENTURING INTO TOTALLY UNRELATED AREAS
16. DOWNSIZING OLDER BUSINESS
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THE CO SHOULD LEARN TO EXIT FROM UNPROFITABLE
BUSINESS AS IT CAUSES A DRAIN ON ITS EFFORTS
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EXITTING RELEASES RESOURCES WHICH CAN BE USED
PRIODUCTIVELY ELSEWHERE
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POINTLESS TRYING TO SALVAGE LOSING BUSINESS
18. STRATEGIC FORMULATION
• Strategies are game plan for achieving results
• According to Michael Porter the generic strategies can be
classified into three categories:
• a) Cost Leadership
• b) Differentiation
• c) Focus Strategy
19. THE MARKETING PROCESS
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VALUE DELIVERY SEQUENCE
MANAGEMENT SEGMENTATION
TARGET MARKET
CREATE VALUE PROPOSITION
DEVELOP MARKET STRATEGIES
PLANNING MARKET PROGRAM
MANAGING THE MARKET EFFORT
20. EXECUTING THE MARKET PLAN
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SALES TARGETS
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BUDGETS
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TRAINING SALES PERSONNEL
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DECIDING THE MARKETING CHANNEL
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ORGANISING PROMOTIONS
