strategic planning - lecture 3 Flashcards
what is strategic planning?
- Strategic planning is designed to provide an organization, its divisions, departments or even individual players with a game plan or road map to achieve specific goals and objectives
- developing and maintaining a strategic fit between the organisations goals and capabilities and its changing marketing opportunities
why is a strategic plan needed?
the absence of a plan can mean that companies are more likley to fail
what are the components of the strategic plan?
- company mission
- company objectives
- portfolio analysis
- planning marketing and other functional stategies
- implementation, feedback and control
what are the two aspects of strategy?
- cooperate strategy
- marekting strategy
(linked, not separate things, can’t formulate one without the other)
what is the cooperate strategy?
helps control, direct and coordinate the different areas in a corporation such as finance, marketing, production
cooperate level strategy affects the whole business
what is the marketing strategy?
operationalise the corporate strategy, inform and achieve cooperate strategy, audit of environment, inform cooporrete strategy that changes may be needed in the direction of the corporate strategy
what is meant by the mission statement?
- short statement explains the purpose of the company
- mostly set by top management/founder
- think about what business are you in (needs/wants/demographics) /what are we in business for (profit/moral/social contribution) / what sort of business are we in
why is a mission statement so important?
if it is unclear or outdated (must be revamped) it can send the wrong image about your business
- it leads to strategic planning, if planning not aline with missions statement then something has gone wrong
who can be used in order to help the question ‘what sort of business are we in?’ - mission statement
Porters Generic Strategies
what is included in porters generic strategies?
- strategic advantage cost leadership (efficiency / low cost airlines) differentiation (innovation e.g. dyson) - strategic target industry wide (whole market) focus (tailor a particular need)
what is wrong with Porters Generic strategies?
not that flexible
what should a mission statement be?
- realistic
- specific
- based on distinct competencies
- motivating (for employees as well, tele them what they are working towards)
what is TEDs mission statement?
spread ideas
what is the second component of strategic planning?
company objectives
what are the company objectives?
what the company is setting out to achieve
need to take into account the audit and SWOT analysis at a company level in order to do these
what must company objectives be?
- specific (e.g. achieve 6% organic growth)
- measurable (so you can see whether you’ve achieved them)
- attainable (realistic)
- Time
what is the third stage in the strategic planning?
portfolio analysis
what is a business portfolio?
the collection of businesses and products that make up a company
(a small company may not have one)
what should a business portfolio match?
the strengths and weaknesses to opportunities in the environment
using the business portfolio what must companies do?
- analyse the current business portfolio
- develop growth strategies
what is portfolio analysis?
a major activity in strategic planning whereby management evaluates the products and businesses that make up a company
what are the steps in analysing current portfolio?
1) identify key businesses (strategic business unit)
2) assess attractiveness
3) decide how much support each SBU needs
what is an example of someone that has SBUs?
Pepsico
kfc, taco bell
what model can be used to analyse the current portfolio?
boston matrix
what is the boston matrix?
way of analysing the portfolio
it categorises products into four categories which are based on:
- market share (low or high)
- market growth (potential customers growing/competitors)
what are the axis on the boston matrix?
vertical (y) = market growth
horizontal (x) = market share
what are the four categories in the boston matrix?
LEFT - star - cash cow RIGHT - question mark - dog
what is meant by the star (BM)?
(top left)
high growth products which are compared strongly with competition, need high investment to keep up, should turn into cash cows
what is a cash cow BM?
low growth products, need less investment, mature products, continue to generate profit for stars
what is the question mark BM?
(top right)
products with low market share but in a high growth market, have potential, all about finding investors who then have to ask which ones they would like to choose
what is the dog BM?
(bottom right)
low market share and low market growth
usually make enough cash to break even if rarely
often close or sell
where would you want your business to be in regards to the boston matrix
any except the dog
what are the assumptions that boston matrix based on?
- market share can be gained from investment in marketing
- market share gains will always generate cash
- best opportunity to build dominant position is during the growth phase
what is the extended boston matrix?
Barksdale and Harris
what happens if there was a negative growth in the market
war horse and dodos
war horse - high market share but negative growth, is this just long term or short e.g. recession
why is the boston matrix criticised?
- market growth is not always based on market attractiveness
- ignores competitor gains
- focuses on current position
- judgement based
- market share not always good at measuring products ability to create cash
apart from the boston matrix what other model can be used to analyse business portfolio?
GE Mckinsey matrix
what is the GE Mckinsey matrix?
looks at business strengths and industry attractiveness, it is more flexible than the BM as you can decide the:
- business strengths as a manager
- industry attractiveness will take into account size of competition and size of industry
- there are three zones (nine squares)
what is on each axis?
GE matrix)
y = industry attractiveness x = business strengths
what are the circles on the GE Matrix mean?
size = indicate the size of the market, bigger the circe the bigger the market shading = percentage of the market (market share) the bigger the better
what are the limitations of GE Mckinsey?
- judging attractiveness and strengths is hard so may decide to grow a business that should have been held if they do not match up
- more complex
- no future
what is a model that looks into the future rather than the past?
Ansoff growth matrix
what is the ansoff growth matrix?
marketing planning model that helps a business determine its product and market growth strategy
what are on each axis in the ansoff model?
vertical = (bottom left) new markets and existing markets (risk increases to new markets) top = existing products and new products (risk increases to new products)
what are the four categories inside ansoff?
top left - market penetration
bottom left - market development
top right - product development
bottom right - diversification
what is market penetration?
growth strategy in which business focuses on selling existing products into existing markets
- secure dominance of market
- business as usual
- loyalty schemes
what is market development?
business seeks to sell existing products in a new market
- risk increases
- geographical market (exports)
- distribution channels
what is product development?
introduce new product into existing market
- R&D devloepment and innovation
- detailed insights into customer needs
- being first in market
what is diversification?
new products new markets
- risk
- clear idea what it expects to gain
what is wrong with growth models?
- not all strategies have to be growth
- harvest (liquidate
- donwsize
what is meant by harvest?
if a market has become unattractive you liquidate the money
could then invest elsewhere
where are the last two stages in strategic planning looked at?
- planning marketing and other functional strategies
- implementation, feedback and control
both looked at in marketing plan
