Chapter 2 - Strategic Planning for Competitive Advantage Flashcards
Strategic Planning
Is the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities.
Strategic Business Units
A subgroup of a single business or collection of related businesses within the larger organization
What are the characteristics of Strategic Business Units
A distinct mission and a specific target market
Control over its resources
Its own competitors
A single business or a collection of related businesses
Plans independent of the other SBUs in the total organization.
What is a portfolio of a business and what is the goal behind it?
Collection of products, services and achievements of the company.
The goal is to create a presence of the business on the market, attract more customers, and show how the business differs from its direct competitors.
Its like a resume for a business for customers
What are the four options in the Ansoff Strategic Opportunity Mix?
- Market Penertration
- Market Development
- Product Development
- Diversification
What is the innovation matrix?
A system developed to help companies see exactly what types of assets need to be developed and what types of markets are possible to grow into BASED ON THE COMPANY’S CORE CAPABILITIES.
What are the three levels in the innnovation matrix?
- Core Innovation
- Adjacent Innovation
- Transformational Innovation
What is core innovation?
Decisions implementing changes to existing assets to provide added convience to existing customers and entice customers away from competitors in the same market share.
What is Adjacent Innovation?
Decisions of using existing abilities/products in new ways and putting it in similar markets.
What is Transformation Innovation?
Decisions made to make brand new products for brand new markets.
What is a portfolio matrix?
A tool for allocating resources among products or strategic business units on the basis of relative market share and market growth rate.
What is relative market share?
It is the ratio between the company’s share and the share of the largest competitor.
What 4 categories does an portfolio matrix break an SBU into?
- Stars
- Cash Cows
- Problem Child
- Dogs
What is a SBU categorized as a Star and what tactics should be employed as a martketing strategy?
Star SBU’s have large profits but need lots of cash to finance rapid growth.
Tactics: Protect the existing market share by reinvesting earnings in product improvement, better distribution, more promotion, and production efficiency.
What is a SBU categorized as a Cash Cow and what tactics should be employed?
A SBU that generates more cash than it needs to maintain its market share. It is in a low growth market.
Tactics:
- Maintain market dominance by being the price leader and making technological improvements in the product.
- Managers should resist pressure to extend the basic line unless they can dramatically increase demand.
- Allocate excess cash to the product categories where growth prospects are the greatest.
What is an SBU categorized as a problem child and what tactics should be employed?
A SBU that has low growth potential and a small market share.
Tactic is to cancel or reduce production or divest.
Divest
Process of selling subsidiary assets, investments, or divisions to maximize the value of the parent company.
What are the 4 Basic Strategies for SBU’s in the matrix after classifying the SBU using the profile matrix?
- Build
- Hold
- Harvest
- Divest
What is planning?
The process of anticipating future events and determining strategies to achieve organizational objectives in the future.
Marketing Planning
Involves designing activities relating to marketing objectives and changing the marketing enviroment
What question does the firms mission statement adress?
What business are we in?
What is marketing myopia?
Defining a business in terms of goods and services rather than in terms of the benefits customers seek
What is the importance of SWOT
Marketers must understand the current and potential environment in which the product or service will be marketed.
What does SWOT stand for?
Strengths, Weaknesses, External Opportunities, Threats
What is environmental Scanning?
The collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan.
Competitive Advantage
A set of unique factors of a company and its products that are perceived by the target market as significant and superior to those of competition.
What is cost competitive advantage?
Means being the low-cost competitor in an industry while maintaining satisfactory profit margins.
What are the ways costs can be reduced?
-Experience curves Efficient Labor No-Frills goods and services Gov subsidiaries Product Design Reengineering Design Innovation New methods of service delivery
What is product/Service differentiation competitive advantage?
Exists when a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition.
What is a niche competitive advantage?
Advantage achieved when a firm seeks to target and effectively serve a small segment of market.
What is Sustainable Competitive Advantage?
An advantage that cannot be copied by the competition.
What is a marketing objective?
A statement of what will be accomplished through marketing activities.
What is a market segment?
A group of individuals or organizations who share one or more characteristics.
MOA (Marketing Opportunity Analysis
The description and estimation of the size and sales potential of market segments that are of interest to the firm and the assessment of key competitors in these market segments.
What is the marketing mix?
Refers to a unique blend of product, place (distribution), promotion, and pricing strategies (often referred to as the four Ps) designed to produce mutually satisfying exchanges with a target market.
What are the four characteristics of a marketing audit?
Comprehensive
Systematic
Independent
Periodic
What is implementation?
The process that turns a marketing plan into action assignments and ensures that these assignments are executed in a way that accomplishes the plan’s objectives.
What is evaluation?
Entails gauging the extent to which marketing objectives have been achieved during the specified time period.
What is a marketing audit?
A thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization.
