Analyzing Market Opp-Strategic Planning

Strategic Planning Process
Winning Markets Through Market-Oriented Strategic

Planning.
It is More Important To Do What is

Strategically Right Than What is
Immediately Profitable.
Kotler……
Dr. Arvind Kumar Jain
1-1
Copyright © 2003 Prentice-Hall, Inc.
Objective:
 How is strategic planning carried out at the
corporate & division levels?
 How is planning carried out at the business
unit level?
 What are the major steps in the marketing
process?
 How is planning carried out at the product
level?
 What does a marketing plan includes? 1-2
Meaning & Scope:
 The strategic Planning provides the route

map for the firm.
 It is a stream of decisions & actions
which lead to effective strategies and
which in turn help the firm achieve its
objectives.
1-3
Strategic Planning: Three Key Areas
& Four Organizational Levels.
The strategic planning calls for action

in 3 key areas.
*Managing Company’s Business as an
Investment Portfolio.
*Involves assessing Business Strength’s,

considering the market’s growth rate &
company’s position.
*Establishing a strategy. 1-4

Strategic Planning: Three Key Areas
& Four Organizational Levels.
Organizational Controlling
Levels Planning Measuring result
Implementing
 The corporate level.
Organizing
Diagnosing results
 The division level.
Implementing
 Business unit level.

Taking Corrective
 Product level. Action

1-5
A Viable Strategic Planning:
 Must have a clearly defined market
 Must have a good match between
corporate strengths and market needs
 Must have significant positive
differentiation in the key success factors
of the business
1-6
Corporate Mission:
To define corporate mission, the company
should address following:
?
Simple-sounding
What is our business?
questions are
Who is the customer? among the most
What is of value to the customer? difficult the
company will
What will our business be? ever have to
What should our business be? answer.
1-7
Corporate Mission:
 A clear, thoughtful mission statement
provides employees with the shared sense
of purpose, direction and opportunities.
 The statement guides geographically
dispersed employees to work
independently & yet collectively towards
realizing the organization‘s goals.
1-8
Corporate Mission:
 Mission statements are at their best when
they are guided by VISION, an almost
―IMPOSSIBLE Dream‖ that provides a
direction for the company for the next 10
to 20 Yrs.
Eg. Sony‘s former president, Akio Morita, wanted everyone to have access
to ―Personal Portable Sound‖, so his company created the Walkman &
Portable CD Player.
 Fred Smith wanted to deliver mail anywhere in U.S. before 10:30 AM the
next day, so he created FEDEX.
1-9
Corporate & Division
Strategic Planning:
 It is done by preparing statement of

mission, policy, strategy and goals,
headquarters establishes the framework
within which the divisions & business
units prepare their plans.
1-10
Corporate & Division
Strategic Planning:
All corporate headquarters undertake 4
planning activities:
Defining the corporate mission.
Establishing strategic business units
(SBU‘S)
Assigning resources to each SBU‘S.
Planning new business, downsizing or
terminating older business.
1-11
Division Strategic Planning:
Strategic Business Unit
 What is a Strategic Business Unit? (SBU)
•A set of products or product lines
•With clear independence from other

products or product lines
•For which a business or marketing

strategy should be designed 1-12
An SBU has following characteristics:
 It is a single business or collection of
related businesses that can be planned
separately from the rest of the company.
 It has its own set of competitors.
 It has a manager who is responsible for
strategic planning.
 Individual Profit Centers.
1-13
Reliance Corporate
Reliance Fabric, Division

Chemicals, Constructions..
Vimal. SBU
Vimal Suttings / Legacy Product

(Readymade) 1-14
Establishing SBU’s:
 The purpose of identifying the company‘s
strategic business units is to develop
separate strategies & assign appropriate
funding.
 Two of the best known business portfolio
evaluation models are:
 BCG Model.
 G.E. Model.
1-15
Boston Consulting Group (BCG)
Approach:
Relative Market Share
High Low
Stars Question Marks
?
• High growth & share • High growth, low share
•Profit potential •Build into Stars or phase out
•May need heavy •Require cash to hold
investment to grow market share
Cash Cows Dogs

• Low growth, high share • Low growth & share
•Established, successful •Low profit potential
SBU’s
•Produce cash
1-16
The General Electric Model (G.E):
Business Strength
Strong Average Weak
C
High
A B
Medium
D E F
Low G
H I
Strategies:
Invest / Grow Selectivity / Earnings Harvest / Divest 1-17
The G.E Strategies:
Market Attractiveness
High Medium Low
High Invest/Grow Invest/Grow Selectivity/Earnings
Medium Invest/Grow Selectivity/Earnings Harvest/Divest
Selectivity/Earnings Harvest/Divest
Low Harvest/Divest
1-18
G.E. Model: Strategies
Position ‗A‘:
Protect Position:
 Invest to grow at maximum digestible rate.
 Concentrate efforts on maintaining strength.
Position ‗B‘:
Invest to Build:
 Challenge for leadership.
 Build selectively on strengths.
 Reinforce vulnerable areas. 1-19
Position ‗C‘:
Build Selectively:
 Specialize around limited strengths.
 Seek ways to overcome weaknesses.
 Withdraw if indications of sustainable growth are lacking.
1-20
Position ‗D‘:
Build Selectively:
 Invest heavily in most attractive segments.
 Build up ability to counter competition.
 Emphasize profitability by raising productivity.
1-21
Position ‗E‘:
Selectivity / Manage for Earnings:
 Protect existing program.
 Concentrate investments in segments where profitability is
good and risks are relatively low
Position ‗F‘:
Limited Expansion or Harvest:
 Look for ways to expend without high risk; otherwise,
minimize investment & rationalize operations.
1-22
Position ‗G‘:
Protect & Refocus:
 Manage for current earnings.
 Concentrate on attractive segments.
 Defend strengths.
1-23
Position ‗H‘:
Manage for Earnings:
 Protect position in most profitable strengths.
 Upgrade product line.
 Minimize investment.
Position ‗I‘:
Divest:
 Sell at time that will maximize cash value.
 Cut fixed costs & avoid investment meanwhile.
1-24
Strategic-Planning Gap:
 The company‘s plans for its existing
business allow it to project total sales &
profits.
 Often these are less than what corporate
management wants them to be. If there is
a gap between future desired sales and
projected sales, corporate management
will have to develop or acquire new
business to fill it.
1-25
1-26
Intensive Growth Opportunities:
It is to identify opportunities to achieve
further growth within current business.
Ansoff has proposed a useful framework

for detecting new Intensive Growth
opportunities called as ―Product – Market
Expansion Grid‖.
1-27
Product-Market Exp. Grid:
Ansoff’s Product-Market Expansion Grid

1-28
Market Penetration Strategy:
The company first consider whether it
could gain ―more market share‖ with its
current products in their current markets
STARBUCKS: Started its operations in Seattle
in 1970‘s as a gourmet Coffee Retailer for local
coffee lovers.
In 1982 Howard Schultz, CEO, identified

unfilled niche for Cafes Serving gourmet coffee
directly to customers & helped the Co. in
attaining loyal customer base in Seattle.
1-29
Market Development Strategy:
The Company considers whether it can find
or develop ―new markets for its current
products‖
STARBUCKS: Started its operations in Seattle
in 1970‘s as a gourmet Coffee Retailer for local
coffee lovers.
Expended its operations in the cities of
Northwest, then throughout North America and
finally across the globe.
1-30
Product Development Strategy:
Further, the company considers to develop
new products of potential interest to its
current market.
STARBUCKS: Introduce new merchandise
including compilation CD‘s and JOE Lifestyle
magazine.
1-31
Product Diversification Strategy:
The company develop ―new products for
new market‖
STARBUCKS: Diversified into grocery stores
aisles with Frappuccino bottled drinks,
Starbucks brand ice cream, and the
purchase of tea retailer Tazo Tea..
1-32
Integrative Growth Opportunities:
It is to identify opportunities to build or
acquire businesses that are related to
current business.
Backward Integration:
Acquire one or more suppliers to gain more
control or generate more profits
1-33
Forward Integration:
Acquire some wholesalers or retailers,
especially if they are highly profitable
Horizontal Integration:
Acquire one or more competitors.
1-34
Diversification Growth Opportunities:
It is to identify opportunities to add
attractive businesses that are unrelated to
current business
Concentric Diversification:
A company starts manufacturing
Computer Tapes as it know how to make
Audio Tape.
1-35
Horizontal Diversification Strategy:
The company might search for new
products that could appeal to current
customers (it might be technologically
unrelated). Eg. Manufacturing Cassette
holding tray, besides Tapes.
1-36
Conglomerate Diversification Strategy:
The company might seek new businesses
that have no relationship to its current
technology, products or markets.
Eg. Business of making software besides
having existing business of Tapes.
1-37
Downsizing Older Business:
Companies must not only develop new
businesses, but must also carefully prune,
harvest, or divest tired old business in older
to release needed resources and reduce
cost.
1-38
Business Unit Strategic
Planning:
 Internal Analysis—company; capability etc.
 External Analysis—customers, market definition, industry
structure
 SWOT Analysis
 Strengths, Weaknesses, Opportunities &
Threats
 Identify & prioritize major problems and
opportunities: selection of key issues
 Based on the firm‘s core competencies, decide
on future options 1-39
SWOT Analysis:
Strength‘s:
 Strengths can be intangible: Good
leadership, strategic insights, customer
intelligence, solid reputation, high skilled
workforce
 Often considered “Core Competencies” –
Best leverage points for growth without
draining your resources
1-40
SWOT Analysis:
Internal Environment (Strength &
Weaknesses Analysis):
Strength‘s:
Strength’s – Those things that you do well,
the high value or performance points
Strengths can be tangible: Loyal customers,
efficient distribution channels, very high
quality products, excellent financial condition
1-41
SWOT Analysis:
Weaknesses:
 Weaknesses – Those things that prevent you
from doing what you really need to do
 Since weaknesses are internal, they are
within your control
1-42
SWOT Analysis:
Weaknesses:
 Weaknesses include: Bad leadership,
unskilled workforce, insufficient resources,
poor product quality, slow distribution and
delivery channels, outdated technologies,
lack of planning, . . .
1-43
SWOT Analysis:
External Environment (Opportunity &
Threat) Analysis:
Macro-environmental forces: Demographic, Economic,
Technological, Political-Legal & Social Cultural)
Micro-environmental forces: Customers, Competitors,
Distributors, Suppliers.
1-44
SWOT Analysis:
Opportunities:
 Opportunities – Potential areas for growth
and higher performance
 External in nature – marketplace, unhappy
customers with competitor’s, better
economic conditions, more open trading
policies, . .
1-45
SWOT Analysis:
Opportunities:
 Internal opportunities should be classified
as Strength’s
 Timing may be important for capitalizing on
opportunities
1-46
Opportunities:
1-47
SWOT Analysis:
Threats:
 Threats – Challenges confronting the
organization, external in nature
 Threats can take a wide range – bad press
coverage, shifts in consumer behavior,
substitute products, new regulations, . . .
1-48
SWOT Analysis:
Threats:
 May be useful to classify or assign
probabilities to threats
 The more accurate you are in identifying
threats, the better position you are for
dealing with the “sudden ripples” of change
1-49
Threats:
1-50
Business Strategic-Planning
Process:
1-51
Strategic Formulation:
Michel Porter‘s Generic Strategies: Provides
a good starting point for strategic thinking:
Overall Cost Leadership Differentiation
Focus
E.g:
Travelocity.Com: IS pursuing a differentiation strategy
by giving Comprehensive range of services to the
traveler.
Lowfare.Com: Is pursuing Lowest cost strategy.
Lastminute.Com: Is pursuing Niche / Focus Strategy 1-52
Strategic Formulation:
McKinsey 7-S Framework:
According to McKinsey & Co.; Strategy is only one of 7
elements in successful business practice.
Structure Strategy, Structure & System:

System are considered the ―hardware‖
Strategy of success.
Shared
Style, Skills, Staff & Shared
Values Values: are considered as
―software's‖.
Skills Style
Staff
1-53
The Marketing Process:
Planning at the corporate, division &
business unit levels is an integral part of the
marketing process in business.
How Company defines its

Business??....
The task of any business is to deliver customer value at

PROFIT. 1-54
Value-Delivery Process:
1-55
Improving Value Delivery The
Japanese Way:
0 customer
feedback time
0 product
0 setup time
improvement time
0
0 defects
purchasing time
1-56
Steps in Planning Process:
 Analyzing Market Opportunities.
 Developing Marketing Strategies.
 Planning Marketing Programs.
1-57
Planning Process:
Demographic- Marketing Technological-
Economic Intermediarie Natural
Environment s Environment
Product
Target
Suppliers PlaceConsumers Price Publics
Promotion
Political- Social-
Legal Competitors Cultural
Environment Environment 1-58
Successful Companies
Should Know How To
Adopt To A Continuously
Changing Market Place….
Thanks
1-59

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Strategic Planning Process

Winning Markets Through Market-Oriented Strategic

It is More Important To Do What is

 The strategic Planning provides the route

The strategic planning calls for action

*Involves assessing Business Strength’s,

*Establishing a strategy. 1-4

 Business unit level.

 Product level. Action

 It is done by preparing statement of

•With clear independence from other

•For which a business or marketing

Reliance Fabric, Division

Vimal Suttings / Legacy Product

Cash Cows Dogs

High Invest/Grow Invest/Grow Selectivity/Earnings

Medium Invest/Grow Selectivity/Earnings Harvest/Divest

Ansoff has proposed a useful framework

Ansoff’s Product-Market Expansion Grid

In 1982 Howard Schultz, CEO, identified

Overall Cost Leadership Differentiation

Structure Strategy, Structure & System:

How Company defines its

The task of any business is to deliver customer value at

 Analyzing Market Opportunities.

 Developing Marketing Strategies.

 Planning Marketing Programs.

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