STRATEGIC PLANNING IN THE
MARKET PROCESS
CORPORATE/DIVISIONAL STRATEGIC
PROCESS
•
•
•
•
•

DEFINING CORPORATE MISSION
ESTABLISHING SBUs
RESOURCE ALLOCATION TO EACH...
THE FACTORS EFFECTING MISSIONS
•
•
•
•

HISTORY/BACKGROUND
CURRENT TRENDS
RESOURCES
BASIC DISTINCT STRENGTH

•

THE MISSIO...
COMPETITIVE SCOPE
•
•
•
•
•

-RANGE OF INDUSTRIES
-PRODUCTS RANGE/APPLICATION
-RANGE OF COMPETENCIES
-MARKET SEGMENT SCOPE...
ESTABLISHING STRATEGIC BUSINESS
UNITS
•
•

AN SBU HAS THE FOLLOWING CHARACTERISTICS
-COLLECTION OF SINGLE BUSINESS/COLLECT...
BCG MATRIX
MARKET GROWTH /SHARE MATRIX

(Build)

(Hold)

Market
Growth
Rate

High

STARS

QUESTION
MARKS

CASH COWS DOGS
(...
• This framework assumes that increase in market share leads to
an increase in cash due to experience curve.
• Another ass...
• Question Marks
• Have low market share/ high growth rate. Because of high
growth rate consume a lot of cash. Because of ...
GE MATRIX
Business Unit Strength
Medium

High

Medium

Low

High

High

Protect
Position

Invest To
Re-build

Build
Select...
GE MATRIX-Contd/•
•

The GE model is more sophisticated than BCG in three major
aspects
a) Market Attractiveness replaces ...
•
•
•
•

Demand variability
Segmentation
Distribution
Technological development

•
•
•
•
•
•
•
•
•
•
•
•
•

Factors effect...
PLANNING NEW BUSINESS
•

INTENSIVE GROWTH

•

INTEGRATIVE GROWTH

•

DIVERSIFICATION

•

DOWNSIZING OLDER BUSINESS
INTENSIVE GROWTH
•

IN THIS STRATEGY THE CO EXAMINES ALL THE POSSIBLE
GROWTH AREAS

•

-INCREASING MKT SHARE WITH EXISTING...
INTEGRATIVE GROWTH
•

INTEGRATING WITH OTHER BUSINESS TO INCREASE THE
COS EARNINGS

•

-FORWARD INTEGRATION

•

-BACKWARD ...
DIVERSIFICATION
•

DIVERSIFICATION IS DESIRABLE WHEN MORE ATTRATIVE
OPPORTUNITIES EXIST OUTSIDE THE PRESENT BUSINESS

•

-...
DOWNSIZING OLDER BUSINESS
•

THE CO SHOULD LEARN TO EXIT FROM UNPROFITABLE
BUSINESS AS IT CAUSES A DRAIN ON ITS EFFORTS

•...
SWOT ANALYSIS
•
•

OPPORTUNITIES
EXTERNAL ANALYSIS

•

THREATS

•
•
•

STRENGTHS

•
•

INTERNAL ANALYSIS
WEAKNESSES

GOAL ...
STRATEGIC FORMULATION
• Strategies are game plan for achieving results
• According to Michael Porter the generic strategie...
THE MARKETING PROCESS
•
•
•
•
•
•
•

VALUE DELIVERY SEQUENCE
MANAGEMENT SEGMENTATION
TARGET MARKET
CREATE VALUE PROPOSITIO...
EXECUTING THE MARKET PLAN
•

SALES TARGETS

•

BUDGETS

•

TRAINING SALES PERSONNEL

•

DECIDING THE MARKETING CHANNEL

•
...
BCG MATRIX
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Sem 1 i-topic-7-str pla

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Sem 1 i-topic-7-str pla

  1. 1. STRATEGIC PLANNING IN THE MARKET PROCESS
  2. 2. CORPORATE/DIVISIONAL STRATEGIC PROCESS • • • • • DEFINING CORPORATE MISSION ESTABLISHING SBUs RESOURCE ALLOCATION TO EACH SBU PLANNING NEW BUSINESS EXITING OLD ONES • • 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 •
  3. 3. THE FACTORS EFFECTING MISSIONS • • • • HISTORY/BACKGROUND CURRENT TRENDS RESOURCES BASIC DISTINCT STRENGTH • 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 • • •
  4. 4. COMPETITIVE SCOPE • • • • • -RANGE OF INDUSTRIES -PRODUCTS RANGE/APPLICATION -RANGE OF COMPETENCIES -MARKET SEGMENT SCOPE -GEOGRAPHICAL SCOPE • MISSION STATEMENTS SHOULD NOT BE REVISED EVERY FEW YEARS IN RESPONSE TO ECONOMIC UPS/DOWNS • IF, HOWEVER,THE MISSION HAS OUTLIVED ITS CREDIBILITY OR CANNOT DEFINE AN OPTIMAL COURSE FOR THE CO, THEN IT NEEDS TO BE REVISED.
  5. 5. ESTABLISHING STRATEGIC BUSINESS UNITS • • AN SBU HAS THE FOLLOWING CHARACTERISTICS -COLLECTION OF SINGLE BUSINESS/COLLECTION OF RELATED BUSINESS GENERALLY PLANNED SEPARATELY FROM REST OF THE CO • -IT HAS ITS OWN SET OF COMPETITORS • -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. • •
  6. 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. 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. 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. 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. 10. GE MATRIX-Contd/• • The GE model is more sophisticated than BCG in three major aspects a) Market Attractiveness replaces growth rate • b) Competitive Strength replaces market share • C) GE is a 3X3 grid while BCG is a 2X2 grid. • • • • • • • • 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
  11. 11. • • • • Demand variability Segmentation Distribution Technological development • • • • • • • • • • • • • Factors effecting Competitive Strength of A SBU Strength of assets/competencies Relative brand strength Mkt Share Mkt share growth Customer loyalty Relative cist position Relative profit margin Production capacity/Distribution strength Technological development Quality Access to finance/invest resources Management strength
  12. 12. PLANNING NEW BUSINESS • INTENSIVE GROWTH • INTEGRATIVE GROWTH • DIVERSIFICATION • DOWNSIZING OLDER BUSINESS
  13. 13. INTENSIVE GROWTH • IN THIS STRATEGY THE CO EXAMINES ALL THE POSSIBLE GROWTH AREAS • -INCREASING MKT SHARE WITH EXISTING PRODUCTS • -DEVELOPING MORE MKTS FOR EXISTING PRODUCTS • -DEVELOPING NEW PRODUCTS FOR ITS EXISTING MKTS • -ADDING ATTRACTIVE BUSINESSES UNRELATED TO ITS PRESENT BUSINESS
  14. 14. INTEGRATIVE GROWTH • INTEGRATING WITH OTHER BUSINESS TO INCREASE THE COS EARNINGS • -FORWARD INTEGRATION • -BACKWARD INTEGRATION • -HORIZONTAL INTEGRATION
  15. 15. DIVERSIFICATION • DIVERSIFICATION IS DESIRABLE WHEN MORE ATTRATIVE OPPORTUNITIES EXIST OUTSIDE THE PRESENT BUSINESS • -THE INDUSTRY SEGMENT BEING PLANNED TO ENTER MUST HAVE GROWTH POTENTIAL • -THE CO MUST HAVEEXPERTISE IN THE AREA • • • • 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. 16. DOWNSIZING OLDER BUSINESS • THE CO SHOULD LEARN TO EXIT FROM UNPROFITABLE BUSINESS AS IT CAUSES A DRAIN ON ITS EFFORTS • EXITTING RELEASES RESOURCES WHICH CAN BE USED PRIODUCTIVELY ELSEWHERE • POINTLESS TRYING TO SALVAGE LOSING BUSINESS
  17. 17. SWOT ANALYSIS • • OPPORTUNITIES EXTERNAL ANALYSIS • THREATS • • • STRENGTHS • • INTERNAL ANALYSIS WEAKNESSES GOAL FORMATION THE PROCESS BY WHICH SPECIFIC OBJECTIVES ARE SPELT OUT WITH RESPECT TO TIME AND MAGNITUDE.
  18. 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. 19. THE MARKETING PROCESS • • • • • • • VALUE DELIVERY SEQUENCE MANAGEMENT SEGMENTATION TARGET MARKET CREATE VALUE PROPOSITION DEVELOP MARKET STRATEGIES PLANNING MARKET PROGRAM MANAGING THE MARKET EFFORT
  20. 20. EXECUTING THE MARKET PLAN • SALES TARGETS • BUDGETS • TRAINING SALES PERSONNEL • DECIDING THE MARKETING CHANNEL • ORGANISING PROMOTIONS
  21. 21. BCG MATRIX

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