WINNING MARKETS-THROUGH MARKET

ORIENTED STRATEGIC PLANNING

Presented By:
Syed Amirul Islam, M. Pharm., MBA
CEO
Amulet Pharmaceuticals Ltd

WINNING MARKETS-THROUGH MARKET

ORIENTED STRATEGIC PLANNING
Market-Oriented Strategic Planning is the
managerial process of developing and
maintaining a viable fit between the organizations
objectives, skills, and resources and its changing
market opportunities.
The aim of strategic planning is to shape the
organizations business and products so that they
yield target profits and growth. Marketing plays a
critical role in the strategic-planning process.
Most large companies consist of four
organizational levels: corporate level, division
level, business unit level, and product level .

CORPORATE & DIVISION STRATEGIC PLANNING

All corporate headquarters undertake four planning
activities:
1. Defining the corporate mission
2. Establishing strategic business units (SBU)
3. Assigning resources to each SBU
4. Planning new business, downsizing older
business.
Organization must sense its search for purpose. A wellworked-out mission statement provides employees
with a shared sense of purpose, direction, and
opportunity toward realizing the organizational
goals.

1. DEFINING THE CORPORATE MISSION:

Mission statement are at their best when they are
guided by a Vision, an almost impossible dream
that provides a direction for the company for the
next 10 to 20 years. Mission statement is starting
point for forming a strategic plan.
Contents of Mission statement are:
Customer need (what is being satisfied.)
Customer groups (who is being satisfied.)
Companys activities, technologies, competencies
(how the company goes about creating value to
customers and satisfying them).

2. ESTABLISHING STRATEGIC BUSINESS UNITS

(SBU):

Most companies operate several business. A business

must be viewed as a customer-satisfying process, not
a goods producing process. Products are transient,
but basic needs and customer groups endure forever.
An SBU has three characteristics:
i) It is a single business or collection of related
business that can be planned separately from the rest
of the company.
ii) It has its own set of competitors.
iii) It has a manager who is responsible for strategic
planning and profit performance and who controls
most of the factors affecting profit.

3.ASSIGNING RESOURCES TO EACH SBU:

The purpose of identifying the companys
strategic business units is to develop separate
strategies and assigning appropriate funding. Yet it
cannot rely just on impressions; it needs analytical
tools for classifying its business by profit potential.
Two of the best-known business portfolio evaluation
models are:
a) the Boston Consulting Group Model and
b) the General Electric Model.

The Boston Consulting Group Model:

The Boston Consulting Group (BCG), a leading
management consulting firm, developed and
popularized the growth-share matrix shown in
the figure. The eight circle represent the current
sizes and position of eight business units in a
hypothetical company. The sales-volume size of
each business is proportional to the circles area.
Thus, the two largest businesses are 5 and 6. The
location of each business unit indicates its market
growth and relative market share.

THE BOSTON CONSULTING GROUPS

GROWTH SHARE MATRIX

THE BOSTON CONSULTING GROUPS

GROWTH SHARE MATRIX
The market growth rate on the vertical axis indicates
the annual growth rate of the market in which the
business operates. In figure it ranges from 0 percent
to 20 percent. A market growth rate above 10 percent
is considered high. Relative market share, which is
measured on the horizontal axis, refers to the SBUs
market share relative to that of its largest competitor in
the segment. A relative market share of 0.1 means
that the companys sales volume is only 10 percent of
the leaders sales volume; a relative market share of
10 means that the companys SBU is the leader and
has 10 times the sales of the next-stronger competitor
in that market. Relative market share is divided into
high and low share, using 1.0 as the dividing line.

THE BOSTON CONSULTING GROUPS GROWTH

SHARE MATRIX

The growth-share matrix is divided into four cells, each

indicating a different type of business:
i) Question marks: Question marks are businesses
that operate in high-growth markets but have low
relative market share. Most businesses start off as
question marks as the company tries to enter a highgrowth market in which there is a market leader. A
question mark requires a lot of cash.
ii) Stars: If the question-mark business is successful, it
becomes a star. A star is the market leader in a highgrowth market. A star does not necessarily produce
cash flow for the company. The company must spend
substantial fund to keep up with the high market growth
and fight off competitors attacks.

THE BOSTON CONSULTING GROUPS GROWTH

SHARE MATRIX
iii) Cash cows: When a markets annual growth rate falls to
less than 10 percent the star becomes a cash cow if it still
has the largest relative market share. A cash cow produces a
lot of cash for the company. The business is the market
leader, it enjoys higher profit margins. If this cash cow starts
losing relative market share, the company will have to pump
money into it to maintain market leadership. If it does not, the
cash cow may become into a dog
iv) Dogs: Dogs are businesses that have weak market
shares in low-growth markets. They typically generate low
profits or losses.
After plotting its various businesses in growth-share matrix, a
company must determine whether its portfolio is healthy. An
unbalanced portfolio would have too many dogs or question
marks and/or too few stars and cash cow.

ASSIGNING RESOURCES TO EACH SBU:

The companys next task is to determine which
objective, strategy, and budget to assign to each
SBU. Four strategies can be pursued:
i) Build: Here the objective is to increase market
share. It is appropriate for question marks whose
market shares must grow to be a cash cow.
ii) Hold: Here the objective is to preserve market
share. This strategy is appropriate for cash cows
which ensures large positive cash flow.

ASSIGNING RESOURCES TO EACH SBU:

iii) Harvest: Here the objective is to increase short-term cash
flow. This strategy is appropriate for weak cash cows whose
future is dim and from which more cash flow is needed.
Harvesting can also be used with question marks and dogs.
iv) Divest: Here the objective is to sell or liquidate the
business because the resources can be better use elsewhere.
This strategy is appropriate for question marks and dogs that
are acting as a drag on the companys profits.
As time passes, SBU s change their position in the growthshare matrix. Successful SBUs have a life cycle. They start as
question marks, become stars, then cash cows and finally
dogs.

4. PLANNING NEW BUSINESS,

DOWNSIZING OLDER BUSINESS:
The Companys plans for its existing businesses allow
it to project total sales and profits. Often, projected
sales and profit are less than what corporate
management wants them to be. If there is a strategicplanning gap between future desired sales and
projected sales, corporate management will have to
develop new to fill it.
Downsizing older business: Companies must not
only develop new businesses but also carefully prune,
harvest, or divest tired old businesses in order to
release needed resources and reduce costs.

BUSINESS STRATEGIC PLANNING:

The business unit strategic-planning process
consists of the eight steps shown in the figure.
1. BUSINESS MISSION:

Each business unit needs to define specific

mission within the broader company mission
2. SWOT ANALYSIS:

The overall evaluation of a companys strength,

weakness, opportunities, and threats is called
SWOT analysis.

SWOT ANALYSIS
External Environmental Analysis (Opportunity and Threat
Analysis):
A business unit has to monitor key macro environment forces
(demographic, economic, technological, political-legal, and sociocultural) and significant micro environment actors (customers,
competitors, distributors, suppliers) that affects its ability to earn profits.
A major purpose of environmental scanning is to figure out new
marketing opportunities.
A marketing opportunity is an area of buyer need in which a company
can perform profitably. Opportunities can be classified according to
their attractiveness and their success probability .
An environmental threat is a challenge posed by an unfavorable trend
or development that would lead, in the absence of defensive marketing
action, to deterioration in sales or profit. Threats should be classified
according to seriousness and possibility of occurrence.

SWOT ANALYSIS
Internal Environmental Analysis
(Strengths and Weaknesses Analysis): It
is one thing to discern attractive
opportunities and another to have the
competencies to succeed in these
opportunities. Each business needs to
evaluate its strengths and weaknesses
periodically. It can be done so by using a
Checklist for Performing Strengths /
Weaknesses Analysis.

3. GOAL FORMULATION:
Once the company has performed a SWOT
analysis, it can proceed to develop specific
goals for the planning period. This stage of the
process is called goal formulation.

Managers use the term goals to describe

objectives that are specific with respect
to magnitude and time. Turning
objectives into measurable goals
facilitates management planning,
implementation, and control.

GOAL FORMULATION:
Most business units pursue a mix of objectives
including profitability, sales growth, market share
improvement, risk containment, innovativeness, and
reputation. The business unit sets these objectives
and then manages by objectives (MBO).
Objectives are qualitative and quantitative which
must be SMART i.e.,
S - Specific,
M - Measurable,
A- Appropriate,
R- Realistic,
T- Time bound.

4. STRATEGIC FORMULATION:
Goals indicate what a business unit wants to achieve;
strategy is a game plan for getting there. Every business
unit must tailor a strategy for achieving its goals,
consisting of a marketing strategy, and a compatible
technology strategy and sourcing strategy. Although
many times of marketing strategy are available, Michael
porter has condensed them into three generic type that
provide a good starting point for strategic thinking:
i) Overall cost leadership,
ii) Differentiation, or
iii) Focus.

5. PROGRAM FORMULATION:
Once the business unit has developed its
principal strategies, it must work out detailed
supporting programs.
Once the marketing programs are tentatively
formulated, the marketing people must
estimate their cost.
Activity-based cost (ABC) accounting should be
applied to each marketing program to
determine whether it is likely to produce
sufficient results to justify the cost.

6. IMPLEMENTATION:
A clear strategy and well-thought-out programs may
be useless if the firm fails to implement them
carefully. Strategy is only one of seven elements
which are involved for the success of the firm. The
first three elements -- strategy, structure, and
systems are considered the hardware of
success. The next four style, skills, staff, and
shared values are the software. When these
soft elements are present, companies are usually
more successful at strategy implementation.

7.FEEDBACK AND 8. CONTROL :

As it implements its strategy, the firm needs to track the
result and monitor new developments in the internal
and external environment. Some environments are
fairly stable from year to year. Other environments
evolve slowly in a fairly predictable way. Still other
environments change rapidly in major and
unpredictable ways.
High performance organization continuously monitor
the environment and attempt through flexible strategic
planning to maintain a viable fit with the evolving
environment.

THANK YOU