CPIM Module 1.2

Crafting and Executing Strategy

the range of activities that a firm performs internally, the breadth of its product and service offerings

Product-Market Growth Matrix

Market penetration

pursuing a larger market share in the exisitng market with the same product, by being more aggressive with the competitors or by being different than the competitors

Product development

The organization focuses on growing within its existing market by introducing new products

Market development

Decision to sell your products to a new market

Diversification

Extending scope to start performing entirely new activities.

An expansion of the scope of the product line to exploit new markets. A key objective of a diversification strategy is to spread the company’s risk over several product lines in case there should be a downturn in any one product’s market.

Related diversification strategy - aiming for Strategic Fit

potential for sharing expertise or assets that will have synergistic effects

assets can be shared to lower costs

brand identity can be transferred to support consumer recognition

Unrelated Diversification Strategy

involving organizations with different value chains and/or different types of resources

Assessment of Diversification Opportunities

1. Industry Attractiveness

2. Cost of Entry

3. Better-off test (assessing synergies)

Multi-Factorial Matrices

Profit sanctuary

created when an organization expands into a foreign market and enjoys a strong and protected competitive position, which then supports competitive activities in the organization’s domestic and foreign markets.

Because of that the company can behave more aggressively on the market - due to the income from other markets

International Strategy Orientations

Horizontal Integration

produces or sells similar products in various geographical locations. Horizontal integration in marketing occurs more frequently than horizontal integration in production

Vertical Integration

Functions that were previously performed by suppliers…are now done internally.

The degree to which a firm has decided to directly produce multiple value-adding stages from raw materials to the sale of the product to the ultimate consumer. The more steps in the sequence, the greater the vertical integration.

Horizontal Scope of Operations

Horizontal Scope - the range of product and service segments that the firm serves within its product or service market.

5 objectives of M&A

1. Creating cost efficiencies

2. Expanding geographical coverage

3. Extending product offerings

4. Gaining access to technology, resources or capabilities

5. Supporting the organization’s ability to adapt to the evelotion of its industry

Directions of Vertical Integration

Backward Integration

the process of buying or owning elements of the production cycle and channel of distribution back toward raw material suppliers

Forward Integration

1) Process of buying or owning elements of the production cycle. 2) The channel of distribution forward toward the final customer.

Outsourcing

The process of having suppliers provide goods and services that were previously provided internally. Outsourcing involves substitution - the replacement of internal capacity and production by that of the supplier.

Market segmentation

a marketing strategy in which the total market is disaggregated into submarkets, or segments, that share some measurable characteristic based on demographics, psychographics, lifestyle, geography, benefits, and so forth.

Customer segmentation

the practice of dividing a customer base into groups of individuals who are similar in specific ways relevant to marketing. Traditional segmentation focuses on identifying customer groups based on demographics and attributes such as attitude and psychological profiles.

Customer Lifetime Value Analysis

Strategic Design Principles

Customer Impact on MPC System

performance objectives

measurements that enable the firm to monitor whether or not the firm’s strategy is being accomplished

Integrated Measurement Model

Balanced Scorecard

Financial; Customer; Business process; Learning and growth

Functional Strategy Level Objectives (FSLO)

Speed

Dependability (resilience)

Flexibility (agility)

Quality

Cost

FSLO - Speed

Time to market, short lead times, high output per time period, and/or fast delivery

FSLO - Dependability

Promise fulfillment, on-time delivery (neither early nor late), and/or products that can take a certain level of wear and tear

FSLO - Flexibility

Ability to ramp up or down in volume quickly or change what is being produced without significant disruption