Lecture 4: Strategic Planning and Company Strategy

Overview of Strategic Planning

  • Purpose of Strategic Planning: Involves developing an overall company strategy for long-run survival and growth.

  • Objectives: Helps define direction and priorities.

  • Process: Involves creating a fit between the organization’s goals, capabilities, and changing market opportunities.

Steps in Strategic Planning

1. Define Mission Statement

  • Questions to consider:

    • Who are we?

    • What do we do?

2. Derive Company Goals and Objectives

  • Determine how to accomplish the mission.

3. Design Business Portfolio

  • Identify businesses that align with the mission.

4. Planning Functional Strategies

  • Each business's implementation strategies, including marketing.

Mission Statement Components

  • Definition: A statement of the organization’s purpose and its intended accomplishments.

  • Key Questions:

    • What is our business?

    • Who is the customer?

    • What do consumers value?

    • What should our business be?

Qualities of a Good Mission Statement

  • Must fit within the environment, be broad, and define target customers and needs.

  • Must be meaningful, motivating, and based on core competencies for competitive advantage.

Toolbox: SWOT Analysis

  • Purpose: Provides a quick overview of a company's strategic situation.

  • Components:

    • Strengths (S) and Weaknesses (W) (Company Level)

    • Opportunities (O) and Threats (T) (Environment)

  • Applications: Use strengths to exploit opportunities and address weaknesses to mitigate threats.

Setting Company Objectives and Goals

  • Characteristics of Good Objectives:

    • Indicative of results, not activities.

    • Measurable.

    • Challenging but achievable with deadlines.

Designing the Business Portfolio

Strategic Business Units (SBUs)

  • Definition: Independent units within the company with separate goals.

  • Assessment Techniques:

    • BCG Matrix

    • SWOT Analysis

Example: Procter & Gamble (P&G)

  • Product categories:

    • Global fabric and home care

    • Global health and grooming

    • Global baby, feminine, and family care

    • Global beauty

BCG Growth-Share Matrix

  • Purpose: Analyzes business portfolios based on market growth and market share.

  • Categories:

    • Stars: High growth and share, needing heavy investment.

    • Cash Cows: Low growth but high share, generating cash.

    • Question Marks: High growth but low share, needing investment to increase share.

    • Dogs: Low growth and low share, limited profit potential.

Strategies Using the BCG Matrix

  1. Build: Transform question mark into star.

  2. Hold: Maintain stars and strong cash cows.

  3. Harvest: Generate short-term cash flow from weak cows, question marks, and dogs.

  4. Divest: Liquidate low-performing businesses.

Planning for Growth

Toolbox: Product Expansion Grid

  • Ansoff’s Matrix: Strategies based on existing vs. new products and markets.

    • Market Penetration: Increase sales of existing products.

    • Market Development: New markets for existing products.

    • Product Development: New or modified products for current markets.

    • Diversification: Ventures into new products and markets.

Marketing Strategy Design

Role of Marketing in Strategic Planning

  • Guiding Philosophy: Marketing concepts drive strategic planning.

  • Inputs for Planning: Helps identify market opportunities and assess capabilities.

Partnering for Value Creation

  • Collaborate with internal departments and external partners for creating value delivery networks.

Key Takeaways

  • Strategic Planning Steps: Defining mission, setting objectives, designing the business portfolio, and involving marketing.

  • Mission Statements: Best when market-oriented; objectives should be measurable and challenging.

  • Marketing's Role: Essential for collaboration in creating customer value.