MKTG1501 - Week 2 - Strategic Planning

What is Strategic Planning?

ELO:THE UNIVERSITY OF QUEENSLAND, AUSTRALIA

Key Points for This Week

  • Importance of strategic planning

  • Steps in strategic planning

  • How marketing fits into the strategic plan

  • Some strategic planning tools

Disney Overview

Disney's Five ESPI Branches

  1. Media Networks

  2. Parks and Resorts

  3. Studio Entertainment

  4. Consumer Products

  5. Disney Interactive

Offerings

  • Movies

  • Theme Parks

  • Merchandise:

    • Mickey stuffies

    • Various food products (cookies, cereals)

  • Others:

    • ABC and various TV channels

    • Numerous radio stations and cable networks

    • Multiple publishing groups and music labels

    • Disney Interactive and other digital ventures

Disney’s Strategy

  • Acquired dozens of companies over the past two decades as a diversification strategy.

  • Question of whether diversification was a good or bad idea leads to the need for understanding strategic planning.

Strategic Planning Defined

  • The process of aligning an organization's goals and capabilities with changing marketing opportunities.

  • Relies on:

    • Clear company mission

    • Supporting objectives

    • A sound business portfolio

    • Coordinated functional strategies

  • Addresses critical questions:

    • Who are we?

    • What do we want to do?

    • How do we do it?

    • What is the market doing?

  • Long-term planning, typically over 5 years, touches on various departments including MIS, marketing, accounting/finance, and R&D.

Steps in Strategic Planning

  • Define the company mission.

  • Understand what the company does.

  • Analyze corporate culture and philosophy.

  • Determine how to accomplish the mission.

  • Identify the businesses that support the overall mission.

  • Assess how each business implements the mission (e.g., Disney HQ vs. ABC and EuroDisney).

Defining the Company Mission

Mission Statement

  • The organization’s purpose and directions for stakeholders.

Key Questions Addressed

  • What is our business?

  • Who is the customer?

  • What does the customer value?

  • What should our business be?

Extended Mission Statement

  • Includes corporate philosophy and culture.

Corporate Philosophy

  • Values and guidelines for operation, focusing on ethics and corporate social responsibility (CSR).

Corporate Culture

  • Shared attitudes and behaviors among employees.

Disney’s Mission

  • To be a leading producer and provider of information and entertainment worldwide.

  • Aims to leverage its brands to create unique and innovative entertainment experiences and products.

Goals and Objectives Related to the Mission

  • Primary goal: to be a leading entertainment producer.

  • Objectives include:

    • Protect and acquire brands.

    • Maximize earnings/cash flow.

    • Allocate capital for growth initiatives.

Designing the Business Portfolio

  • Determine what products/services to offer.

  • Organize offerings into Strategic Business Units (SBUs).

Definition of SBU

  • A unit with a specific mission and objectives, planned independently of other units.

  • Disney has five SBUs: media networks, parks and resorts, studio entertainment, consumer products, and Disney interactive.

Designing Marketing Strategy

  • Requirements for detailed planning

    • Market segmentation

    • Targeting specific customers

    • Positioning products

    • Developing the marketing mix (the 4Ps)

Strategic Planning Tools

ELO:THE UNIVERSITY OF QUEENSLAND, AUSTRALIA

Where Marketing Fits in Strategic Planning

  • Marketing as a guiding philosophy centered on serving customer needs.

  • Provides insight into market opportunities and the company’s capacity to leverage them.

  • Focuses on market positioning, customer satisfaction, and retention.

Business Portfolio Analysis

  • Collection of businesses/products in the company.

Key Analysis Steps

  • Analyze current business portfolio and SBUs.

  • Decide on investment strategies for SBUs.

  • Develop growth strategies based on portfolio analysis.

Strategic Business Unit (SBU)

  • A unit with distinct missions and objectives

  • Must align with the overall mission statement.

  • Can be a division, product line, or a single product/brand.

Analyzing Portfolios

  • Methods to evaluate products for retention or discontinuation

  • Tools like the Boston Consulting Group Matrix for growth strategies.

Boston Consulting Group Growth-Share Matrix

Metrics

  • Market growth rate and relative market share used to categorize products:

    • Cash Cow

    • Dog

    • Question Mark

    • Star

Product-Market Expansion Grid

  • Identifies four potential growth areas:

    • Market Penetration

    • Product Development

    • Diversification

    • Market Development

Disney Revisited

Future Acquisitions

  • Aim for businesses related to mission and capabilities.

  • Examples include Fox Family Worldwide, The Muppets, Pixar, Marvel, etc.

Diversification Strategy

Advantages

  • Growth and risk spreading.

  • Better use of existing resources.

Disadvantages

  • High-risk nature and complexity of coordinating diverse businesses.

  • Potential detriment to profitability based on excess diversification.