Strategic Planning and SWOT Analysis

CHAPTER 2: Strategic Planning

  • Development of strategic plans and strategies for products along with their pricing, promotion, and delivery.

VALUE PROPOSITION

  • Definition: The value proposition specifies the particular benefits that a product or service offers to a buyer. It delineates how an offering is superior to competitor offerings for a specific target market.

  • Key Questions Addressed:

    • "Why should I buy from you?"

  • Applicability:

    • Individuals, especially students, should also create their own value propositions.

    • Example of a personal application: "Why should I hire you?"

    • Exercise: Write out your personal value proposition.

CONDUCTING A SWOT ANALYSIS

  • SWOT Analysis Overview:

    • A systematic method for evaluating a firm’s Strengths, Weaknesses, Opportunities, and Threats.

  • Internal Factors:

    • Strengths: Characteristics that give the firm an advantage over others.

    • Example: Firm's brand name and resources.

    • Weaknesses: Aspects that place the firm at a disadvantage comparatively.

    • Example: Low product awareness, poor facility location.

  • External Factors:

    • Opportunities: External conditions that can enhance the firm’s performance.

    • Example: Demand for the product, size of the market.

    • Threats: External conditions that could harm the firm.

    • Example: Bad economy, competition.

ANALYSIS OF THE ENVIRONMENT

  • Types of Environments:

    • Macro Environment: Broader societal forces affecting the micro and business environments, including:

    • Economic factors

    • Demographic trends

    • Social and cultural trends

    • Political and legal regulations

    • Technological changes

    • Price and availability of natural resources

    • Micro Environment: The immediate environment surrounding the firm which includes:

    • Competition

    • Suppliers

    • Marketing intermediaries (retailers, wholesalers)

    • The public

    • The company itself

    • Customers

  • Importance of Competitive Analysis:

    • Involves examining any available information on competitors, often utilizing secret shoppers to gain insights.

    • Also considers the political and legal environment to ensure compliance with all laws and regulations, such as vaccination requirements.

MISSION STATEMENT

  • Definition: The mission statement articulates the purpose of an organization, explaining why it exists.

  • Applicability: Mission statements are essential for both profit and nonprofit organizations to guide their operations and strategic direction.

FORMULATING STRATEGIES

  • Hierarchy of Strategy:

    • Objectives lead to Strategies, which in turn can be broken down into Tactics.

    • Strategies define the actions necessary to achieve objectives.

    • Tactics are specific actions undertaken to implement the strategies. Examples include:

    • Coupons

    • Television commercials

    • Banner ads

  • Marketing Plan:

    • A strategic plan that gives the marketing department direction regarding:

    • Which products will be created

    • How products will be exchanged for revenue

    • How products will be communicated

    • How products will be delivered

    • Supporting research and forecasts to back the strategic plan.

PRODUCT AND MARKET ENTRY STRATEGIES

  • Examples of Product and Market Entry Strategies:

    • P&G coupons as pricing strategy.

    • Starbucks opening stores in China: Leveraged local market insights.

    • Utilizing Kool Aid as a base for new flavors of Diet Coke.

    • Developing new products, such as a cell phone with a better camera.

    • Introduction of Ford motorcycles as an unconventional product entry.

INTERNATIONAL MARKET ENTRY STRATEGIES

  • Different forms of international market entry:

    1. Companies hiring manufacturers to produce products in another country.

    2. Ownership of physical facilities in a foreign market.

    3. Selling products directly to buyers abroad.

    4. Licensing the right to produce products to firms in foreign markets.

    5. Establishing longer-term selling agreements allowing operations under corporate name for a share of profits.

    6. Forming partnerships between two or more companies to facilitate entry into new markets.

THE BOSTON CONSULTING GROUP (BCG) MATRIX

  • BCG Matrix Overview:

    • A strategic tool used to evaluate the portfolio of products based on market share and growth rates.

  • Classifications Involved:

    • Cash Cows: High market share, low market growth. These products generate more cash than what is invested.

    • Question Marks: Low market share but in high growth markets; require careful consideration on whether to invest or divest.

    • Dogs: Low market share and low growth, generally regarded as less desirable investments.

    • Strategy Suggestions:

    • Use funds from cash cows to invest in high-growth products like question marks.

    • Consider harvesting or ceasing production of dog products.