Strategic Planning



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Chapter 2 : Strategic Planning



Strategic Planning arrow_upward


  • The process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marketing opportunities is known as strategic planning.
  • In other words “The strategic organization of the communication of data” is known as strategic planning.
  • Marketing managers constantly have to assess:
    • Which customers they are trying to reach?
    • How they can design products and services that provide better value?
  • A business must adapt to reflect changes in the marketplace:
    • Make decisions about how to change the marketing mix in order to succeed.
    • This process of adapting and decision making is known as marketing planning.

    The Nature of Strategic Planning arrow_upward


  • Strategic planning is the management task concerned with the growth and future of a business enterprise.
  • Strategic Planning helps to:
    • Map out where the company will go.
    • Create a framework for corporate decision-making.
    • Define objectives as well as methodologies for achieving them.
    • Ensure that opportunities are chosen wisely.
    • Ensure best utilization of resources.
    • Build competitive advantages and core competencies.

    Marketing Planning arrow_upward


  • Marketing planning is a process for determining what a business should become and how it can optimally achieve that goal.
  • It can help to:
    • Generate commitment to a strategy.
    • Obtain resources needed to build and invest in the business.
    • Set objectives and strategies.
    • Measure performance.

    Strategy at Different Levels of a Business arrow_upward


  • A plan that indicates how a division intends to compete against its rivals in an industry is known as business strategy.
  • There are three main levels of business strategy:
    • Corporate Strategy.
    • Business Unit Strategy.
    • Operational Strategy.

    Corporate Strategy:

  • It is concerned with the overall purpose and scopes of the corporation and the way its various business operations work together to achieve particular goals.

  • Business Unit Strategy:

  • In it large companies will prepare a separate business unit strategy for each division and those various divisions will have considerably different objectives.
  • So it looks at how a business is doing in a particular market.

  • Operational Strategy:

  • A plan of action implemented by a firm that describes how they will employ their resources in the production of a product or service is known as operational strategy.
  • It looks at the organization of the business, and how this contributes to the realization of business goals.

  • The Boston Consulting Group (BCG) Matrix arrow_upward


  • The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group.
  • The Boston Consulting Group matrix can help managers to evaluate products and services or a portfolio of businesses.
  • Each business unit is evaluated in terms of two factors:
    • Market share (Market serviced by the company).
    • Growth prospects (Measure of market’s attractiveness).
  • The larger a firm’s share:
    • The stronger its position.
    • The greater the growth in a market.
    • The better the future possibilities.
  • Four combinations emerge:
    • Stars
    • Cash cows
    • Question marks
    • Dogs

    Stars:

  • High growth products with a strong market presence.
  • Probably need high investment to maintain position.

  • Cash Cows:

  • Low growth products with a high market share.
  • Probably don't need much investment, but require management to maintain profitability.

  • Question Marks:

  • They are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is large net cash consumption.
  • Products which have potential, but may require investment to yield decent profits.

  • Dogs:

  • More charitably called pets, are units with low market share in a mature, slow-growing industry.
  • Rarely worth investing in, dogs should at least break even in order to justify their expense; otherwise, they should be pulled/terminated/discontinued.

  • Stages of Strategic Planning arrow_upward


  • Strategic planning is the process of formulating, implementing and evaluating strategies.
  • Four stages of strategic planning are:
    • Prepare,
    • Plan,
    • Implement,
    • Review/Revise.

    Prepare:

  • This stage includes mission and vision assessment for a business, determining goal of a business.

  • Plan:

  • In this stage strategies are planned in order to achieve company’s goal and to attain better profitability.
  • But before this priorities must be established by considering the needs, strengths and resources of the organization.

  • Implement:

  • Strategy implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and objectives.

  • Review/Revise:

  • This stage starts the cycle over again, allowing the plan to be continuously updated. This will keep it current and meaningful to the organization.
  • Phases of the strategic planning process:
    • Mission and Vision Statement,
    • Objectives,
    • Situational Analysis,
    • Strategy Formulation,
    • Implementation,
    • Evaluation and Control.

    Mission and Vision Statement:

  • The mission statement describes the company's business vision, including the unchanging values and purpose of the firm and forward-looking visionary goals that guide the pursuit of future opportunities.
  • This is the phase where the company identifies:
    • Objectives,
    • Products,
    • Business,
    • Employees etc.

    Objectives:

  • Objectives are concrete goals that an organization seeks to reach.
    • It can be financial or strategic.
  • These goals must be measurable, so that progress towards achieving them can be tracked.

  • Situational Analysis:

  • Situation analysis means obtaining current information about the organization's strengths, weaknesses, and performance - information that will highlight the critical issues that the organization faces and that its strategic plan must address.
  • Comprehensive understanding of an organization’s present state is crucial when planning for the company’s future and pursuing its objectives.
  • Situation analysis includes:
    • The Internal Environment.
    • The External Environment.

    The Internal Environment:

  • The internal audit assists the company to find out their internal resources.
  • The goal of the internal audit is to identify company’s strengths and weaknesses.

  • The External Environment:

  • The external environment is made of:
    • Political, legal, social, and technological issues.
  • A profile of the strengths, weaknesses, opportunities, and threats is generated by means of a SWOT analysis.

  • SWOT Analysis arrow_upward


  • SWOT is commonly used as part of strategic planning and looks at:
    • Internal strengths (S).
    • Internal weaknesses (W).
    • Opportunities in the external (O) Environment.
    • Threats in the external environment (T).
  • SWOT analysis is a flexible concept that can be used in various scenarios:
    • Assessing projects or business ventures.
    • Making decisions.
    • Solving problems.
    • Formulation of strategies.

    Strengths:

  • A firm's strengths include its resources and capabilities, which can be used to develop a competitive advantage.

  • Weaknesses:

  • The lack or insufficiency of certain strengths can result in a weakness.

  • Opportunities:

  • Analysis of external factors can yield new profit opportunities.

  • Threats:

  • Changes in the external environment also may present threats to the firm.

  • Strategy Formulation:

  • A strategy is a plan for achieving the company’s goals.
  • To attain better profitability, a company develops core competencies, ideally at a faster clip than its rivals.

  • Implementation:

  • The way a strategy is put into practice.
  • Corporate strategy is often initially expressed as high-level goals.
  • These goals must be translated into specific desired behaviors or processes that can be implemented.
  • This also includes identifying necessary resources.

  • Control:

  • Once implemented, the results of the strategy need to be measured and evaluated.
  • Evaluation and control consists of the following steps:
    • Define parameters to be measured.
    • Define target values for those parameters.
    • Perform measurements.
    • Compare measured results to the pre-defined standard.
    • Make necessary changes.


    Thank You from Kimavi arrow_upward


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