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1、BA686-Week #2: Strategic Planning,The Big Picture,Situation & SWOT Analysis,Initial Situation,Begun-Step # 1,You are finding answers re:,How the market is segmented & the relevant criteria that consumers use in their purchasing decisions The nature & magnitude of the competition Existing & emerging
2、Economic & Technological trends that will impact demand, pricing, product design & positioning,Financial Situation Margins Working Capital Financial Structure Wealth Creation Productivity Marketing Mix,Your Companys:,Situation &Swot Analysis answers 1st of the big 3 Questions: Where are we now?,Stra
3、tegic Thinking necessary to answer next 2 Big Questions:,1.Where are we now? 2.Where do we want to go? What business(es) should be in Market positions to stake out? Consumer needs & segments serve? Outcomes to achieve? 3.How do we get there?,“If you dont know where you are going any route will get y
4、ou there.” Chris Bartlett,Harvard Business School,What is Strategy?,A process A plan A Set of Goals & Objectives A Vision A Coordinating effort A Management tool A Set of relationships A Lecture in BA686,One definition of Strategy:,Stake out a market position Conduct operations Attract & satisfy cus
5、tomers Achieve organizational objectives,Managements “game plan”- to,Another Definition,Strategy is the managerial process of: developing & maintaining a strategic fit between the organizations objectives & resources .and its changing market opportunities,Even if know what strategy is-,Only 5% of wo
6、rkforce gets the strategy Only 25% of managers have incentives linked to strategy 60% of organizations dont link budgets to strategy 85% of executive teams spend less than 1hour/ month discussing strategy 90% fail to execute strategy successfully,Robert S. Kaplan and David P. Norton The Strategy-Foc
7、used Organization, 2000,3 Levels of Strategy,Corporate-Level : In what business do we compete?,Business-Level : How do we compete?,Functional-Level : How do we coordinate?,Corporation,Level 1-Corporate Strategy,In which businesses do we compete?,Corporation,?,Growth Strategy,Deciding on what Product
8、s & Markets to compete with & in,Market Penetration,ProductDevelopment,Market Development,Present,New,P R O D U C T,New,M A R K E T,Present,Growth Strategies,Diversification,Concentrate on your primary line of business & look for ways to meet growth objectives thru increasing your level of operation
9、 in your primary business,Level 2: Business Unit Strategy: How do we Compete?,Price?,Quality?,Focus?,w/ what Competitive Advantage Thru Cost Advantage- Offer comparable benefit as competitor but produced at lower cost Thru Differential Advantage- Offer superior benefits to competitor-,w/in which Mar
10、ket Segments All market segments Niche segments Evolving segments,Competitive Strategy is the creation of a unique & valuable position- The position is based on- Performing the same activities as competitors, but differently -or performing a different set of activities,Porters Generic Strategies Str
11、ategies & Mission Statements,You can also Formulate Strategy by what dimension you compete on:,Differentiation: Deliver unique & superior value in terms of product quality, features, service,You can Formulate Strategy by the-,Number & nature of segments compete w/in- Undifferentiated Differentiated
12、Niche Strategy,& You can Formulate Strategy by-Riding A Products Life Cycle,Adjust Marketing Mix according to natural Drift of products w/in segments-,Cost/Quality Differentiation Number & nature of segments compete w/in Riding the Product Life Cycle,Put them all together &,Product Quality,Cost,Broa
13、d Market,Niche Mrkt,Evolving Mrkt,Compete on:,#1,#2,#3,Number & nature of segments compete w/in,Ride Product LifeCycle,Competitive Strategy Matrix,Product Quality,Competitive Strategy Matrix,Cost,Broad Mrkt,Niche Mrkt,Evolving Mrkt,Compete on:,Cost Leadership Strategic Choices,A cost leader does not
14、 try to be industry innovator The overriding goal is- increased efficiency & lower costs relative to rivals Will seek to minimize costs in marketing, R&D & production,Business-Level Strategy:Cost Leadership,Advantages A cost leader is able to charge lower prices Even at same price more efficient cos
15、t leader generates greater profitability,An overall cost leader will attempt to be low-cost producer in every segment of the market.,- seeks to dominate the price sensitive market segments. -sets prices below all competitors and still be profitable,Products will be allowed to age & change in appeal
16、from High End, to Traditional, and eventually Low End buyers.,Product Quality,Competitive Strategy Matrix,Cost,Broad Mrkt,Niche Mrkt,Evolving Mrkt,Compete on:,Generic Business-Level Strategy: Differentiation,Create a product that customers perceive as distinct/unique & offer superior quality/service
17、 Advantage Customers expect & willing to pay premium prices,Differentiator,Will have significant expenditures in R&D & production.Because you want/need to make high quality/highly desirable product Will have significant expenditures in marketing Because you need to create maximum awareness & brand e
18、quity.,Differentiation Advantage, as you develop greater brand equity thru increased product quality & awareness . You develop greater brand loyalty. The greater the loyalty. the less the price sensitivity,Differentiation: Disadvantages,Difficulty in maintaining long-term distinction in customers ey
19、es Agile competitors can quickly imitate Difficulty/expense of maintaining premium pricing requires greater marketing costs,match their ideal criteria for positioning, age, and reliability.,Level 3- Functional Strategy,How do we coordinate?,What makes a decision strategic?,Multi-functional in scope
20、& consequences Requires choice & trade-offs, integration & alignment,In order to execute & achieve selected growth & competitive strategies-Need to coordinate decisions across all Functional domains,Marketing,Production,Finance,R&D,HR,Functional Integration & Strategic Alignment,Getting In-Sync w/ F
21、unctional Planning,The goal of functional planning is to achieve a state of Internal Strategic Alignment,MARKETING,PRODUCTION,FINANCE,INTERNAL STRATEGIC ALIGNMENT,MARKETING,PRODUCTION,FINANCE,Achieved when : All Decisions made by & within all functional areas are in sync w/ one another, As well as w
22、ith the overall strategic direction of the firm,Functional Planning Matrices,Examples of: internal strategic alignment,Functional Alignment: In Achieving Cost Efficiency,Functional Alignment: Implementing Differentiation Strategy,Functional Alignment: In Achieving Superior Innovation,Functional Alig
23、nment: Superior Customer Rlshps,When all decisions made by & within all functional areas are in sync w/ one another, As well as w/ your overall strategic direction - you achieve,Distinctive Competencies,Competitive Advantage*,Distinctive Competencies,*Achieved when you sustain profits above Industry
24、 Average,Distinct competencies needed to achieve selected competitive strategy,Areas in which you can develop “Distinct Competencies”,MARKETING: Awareness & Accessibility R&D: Product innovation & design PRODUCTION: Plant Automation & utilization Human Resources: Worker Expertise & Training,Distinct
25、 Competencies,Competencies in automation & human resources could lead to a competitive advantage in cost leadership.,Achieving Competitive Advantage thru Cost-Focused Strategy,Allows for good profit margins on sales while keeping prices low especially in price-sensitive segments,Functional Alignment
26、,Distinct Competencies,Competencies in awareness, accessibility & design could lead to a competitive advantage built upon differentiation,Differentiator,Seeks to create maximum awareness & brand equity. Wants to be well known as a maker of high quality/highly desirable products,Functional Alignment,
27、Virtually all tactical mistakes that are made when implementing strategy are a consequence of the lack of synchronization of decisions made in at least two functional areas,R&D and Production breakdown,You develop a new product but forget to buy plant & equipment for itthe year before it is to be la
28、unched,Marketing, Production & Finance out of sync,The company takes an emergency loan because inventory levels increase,Marketing, R&D, and Production out of sync,You reposition a product from the High End to the Traditional segment, but do not address their material & labor costs,Everybody is out
29、of sync!,Financial decisions are made before knowing the budget demands of all R&D, Marketing and Production decisions,Functional alignment- decisions matrix,EXAMPLE: Functional alignment- decisions matrix,EXAMPLE: Functional alignment- decisions matrix,TACTICS -Example: decision matrix- to add a ne
30、w High End product,Tonights,Finish Situation Analysis Begin to draft Mission & Vision Statements,Need to start thinking abt:,Who you are & Where you want to go? *Your Mission & Vision,We will produce outstanding financial returns by providing totally reliable, competitively superior, global, air-gro
31、und transportation of high-priority goods and documents that require rapid, time-certain delivery.,Mission or Purpose is a precise description of what an organization does. It should describe the business the organization is in. It is a definition of “why” the organization exists,A vision is a state
32、ment about what your organization wants to become A compelling description of the state and function of the organization once it has implemented and achieved the strategic plan,http:/,Strategy & Vision Statements,Valuable,http:/,Strategies & Mission Statements,Tonights,Finish Situation Analysis Begi
33、n to draft Mission & Vision Statements Select Growth & Competitive Strategies,Getting it together,To compete on cost or differentiation that is the question,Next weeks,Begin drafting “functionally aligned” strategic & tactical decisions matrices,Need to begin to determine the basic objectives & specific tactical decisions that need to be made within & across each management domain in order to successfully implement your growth & competitive strategies,