BUSINESS ENTERPRISE SIMULATION

INTERNAL AND EXTERNAL ENVIRONMENTAL SCANNING

Internal Analysis of The Environment

  • The first step of environmental scanning.

How Businesses Conduct Internal Scanning:

  1. Employee Interaction
  2. Setting Objective
  3. Identifying Strengths and Weaknesses

WHAT CAN BE USED TO ASSESS THE INTERNAL ENVIRONMENT?

-interviews, surveys, discussions, evaluations

SWOT- a widely used strategic planning tool that organizations use to perform a comprehensive and competitive analysis of various internal and external factors

  • Value of SWOT analysis depends on the objectives of those who carry out the SWOT test.
  • Strengths and weaknesses are internal variables. Opportunities and threats are external variables

Strengths - things your company does well

  • Qualities that separate you from competitors
  • Internal resources
  • Tangible assets

Weaknesses - things company lacks

  • Things competitors do better than you
  • Resource limitations
  • Unclear unique selling proposition

Opportunities - underserved markets for specific products

  • Few competitors in the area
  • Emerging need for your products or services
  • press/media coverage of company

Threats - emerging competitors

  • Changing regulatory environment
  • Negative press/media coverage
  • Changing customer attitudes toward your company

EXTERNAL ENVIRONMENT ANALYSIS SCANNING

  • Examining the industry environment of the organization
  • Consists of all those forces of external that affect the working of a business
  • Refers to the conditions, forces, events and situations within which business enterprises have to operate
  • Closely related to SWOT analysis

Industry - a group of companies offering products or services that are close substitutes for each other (soft drinks, mobile phones, sportswear)

Market Segment - distinct groups of customers within a market that can be differentiated from each other based on individual attributes and specific demands.

  • Can be separated by characteristics such as: geography, demography, behavior

Supply Chain - the system involved in converting a product or service from raw materials into finished goods and then transporting finished goods from the supplier to the consumer

WHY DO BUSINESSES NEED TO CONDUCT A THOROUGH EXTERNAL ANALYSIS AND ANALYZE ITS SUPPLY CHAIN?

  1. To meet customers at a least cost
  2. To quickly distribute products/ increasing speed of getting product from production market
  3. Boost customer service
  4. Improve financial position

PESTEL ANALYSIS - to round off external analysis, a company must conduct a examination of the Political, Economic, Social and Technological landscape of the industry

Political - Political Stability, Corruption, Foreign Trade Policy, Tax Policy, Funding grants

Economic - Economic Growth, Interest Rates, Inflation, Disposable Income of Consumers, Labour Costs

Social - Population Growth, Age Distribution, Cultural Barriers, Consumer Views, Workforce Trends

Technological - Emerging Technologies, Maturing Technologies, Copyright and Patents, Production and Distribution, Research and Investment

Legal - Regulation, Employment Loans, Consumer Protection Law, Tax Policies, Antitrust Laws

Environmental - Climate, Environmental Policies, Availability of Inputs, Corporate Social Responsibility

IMPORTANCE OF PESTEL ANALYSIS - helps determine steps to take in starting business and bases of SWOT analysis

  • Helps provide what customer need and wants leaning towards being business solution oriented for the customers

THE NATURE OF STRATEGIC MANAGEMENT

  • Strategic Management - art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives
  • Used synonymously with “strategic planning”
  • Strategic Plan - company’s game plan
  • Results from tough managerial choices among numerous good alternatives and signals commitment to specific markets, policies, procedures, and operations

STAGES OF STRATEGIC MANAGEMENT:

  1. Strategy Formulation - includes developing a vision and mission, identifying an organization’s external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue
  2. Strategy Implementation - requires firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed
  • Often called “action stage”
  1. Strategy Evaluation - reviewing external and internal factors that are the bases for current strategies, measuring performance, and taking corrective actions

>These three occur at three hierarchical levels in a large organization: corporate, divisional or strategic business unit, and functional

INTEGRATING INTUITION AND ANALYSIS

  • Most organizations can benefit from strategic management which is based upon integrating intuition and analysis in decision making
  • Intuition is particularly useful for making decisions in situations of great uncertainty or little precedent

KEY TERMS IN STRATEGIC MANAGEMENT

  • Competitive Advantage - anything that firm does especially well compared to rival firms
  • Strategists - individuals who are most responsible for success or failure of an organization
  • Vision Statement - often considered the first step in strategic planning “What do we want to become?”
  • Mission Statement - enduring statements of purpose that distinguish one business from other similar firms
  • Identifies scope of firm’s operations in product and market terms “What is our business?”

JetBlue - “to inspire humanity – both in air and on the ground

Tesla - to accelerate the world’s transition to sustainable energy

TED - spread ideas

LinkedIn - to connect the world’s professional’s to make them more productive and successful

  • Objectives - specific results that an organization seeks to achieve in pursuing its basic mission
  • Long term means more than one year
  • Should be challenging, measurable, consistent, reasonable, clear
  • Business Objective - a measurable result an organization is aiming to accomplish

Specific - make your goal specific and narrow for more effective planning

Measurable - goal and progress are measurable

Achievable - goal should be reasonably accomplished within a certain time frame

Relevant - goal should align with your values and long term objectives

Time-based - realistic and ambitious end date clarify task prioritization and increase motivation

As organization grows, it’s important to regularly form new business objectives to effectively track employees’ performance and ensure the business is progressing and improving

  • Strategies - means by which long-term objectives will be achieved
  • Annual Objectives - short term milestones that organizations must achieve to reach long-term objectives
  • Measurable, quantitative, challenging, realistic, consistent, prioritized
  • Should be established at the corporate, divisional, and functional levels in a large organization
  • Policies - means by which objectives will be achieved
  • Guidelines, rules, procedures
  • Guides to decision making and address repetitive or recurring situations

STRATEGIC MANAGEMENT MODEL

  1. Where are we now?
  2. Where do we want to go?
  3. How are we going to get there?

BENEFITS OF STRATEGIC MANAGEMENT

  • Benefit of strategic management has been to help organizations formulate better strategies through use of more systematic, logical, and rational approach to strategic choice
  • Communication is a key to successful strategic management

BENEFITS TO FIRM THAT DOES STRATEGIC PLANNING

  1. ENHANCED COMMUNICATION (Dialogue, Participation)
  2. DEEPER/ IMPROVED UNDERSTANDING (on other’s view and what firm is doing/planning and why)
  3. GREATER COMMITMENT (to achieve objectives, implement strategies, work hard)

COMPANY AND MARKETING STRATEGY

  • Strategic Planning - the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities
  • Consultants may offer valuable services and expertise during strategic planning process

STEPS IN STRATEGIC PLANNING

PROCESS

Mission Statements should…

  1. Serve as guide for what organization wants to accomplish
  2. Be “market-oriented” rather than “product-oriented”
  3. Be neither to narrow or too broad
  4. Fit with the market environment
  5. Be motivating

Mission Statements guide the development of objectives and goals

  • Objectives are developed at each level in organization hierarchy
  • Strategies are developed to accomplish objectives

Google.com - one of the leading internet search engines

Business Portfolio - collection of businesses and products that make up the company

  • Designing portfolio is a key step in strategic planning process

Portfolio Design:

Step 01: Analyze current business portfolio

Step 02: Shape the future business portfolio

GROWTH SHARE MATRIX

Matrix approaches to formal planning share many problems:

  1. Difficult, time-consuming, and costly to implement
  2. Focus only on current businesses
  3. Too strongly emphasize market share growth or growth via diversification

Designing The Business Portfolio Also Involves:

  1. Developing strategies for growth by identifying, evaluating, and selecting promising new market opportunities
  2. Developing strategies for downsizing the business portfolio

PRODUCT/MARKET EXPANSION GRID

Marketing play a key role in the strategic planning process

  • Marketing Plan - the advertising strategy that a business will implement to sell its product or service.
  • Helps determine who the target market is, how to reach them, price of product or service should be, and how company will measure its efforts
  • Marketing Implementation - process of putting your marketing strategy into real-life practice to drive useful results
  • Market Analysis - a quantitative and qualitative assessment of a market
  • Marketing Control - process of comparing actual performance of marketing department with standards

S- EGMENTATION: divides market into distinct groups of customers

T- ARGETING: determine which customer group to focus marketing efforts on

P- OSITIONING: create product positioning and market mix that is most likely to appeal to the selected audience

In marketing, MARKET SEGMENTATION is the process of dividing a broad consumer or business market into sub-groups of consumers based on characteristics

TYPES OF MARKET SEGMENTATION:

  1. GEOGRAPHIC SEGMENTATION- creating groups of customers based on geographic boundaries
  2. PSYCHOGRAPHIC SEGMENTATION - grouping target audience based on behavior, lifestyle, attitudes, and interests
  3. DEMOGRAPHIC SEGMENTATION - dividing market to different variables (age, gender, income, etc.)
  4. BEHAVIORAL SEGMENTATION - focuses on specific reactions and the way customers go through their purchasing processes

THE MARKETING PROCESS

Key Elements

  • Analyzing marketing opportunities - strategic planning and business portfolio analysis help identify and evaluate marketing opportunities
  • Marketing process aims to help the firm plan how to capitalize opportunities
  • Selecting Target Markets - segmentation process divides market into market segments
  • Target Marketing chooses which segments are pursued
  • Market Positioning for product is then determined
  • Developing The Market Mix - competitor analysis guides competitive marketing strategy development
  • Strategy leads to tactics via marketing mix:

Four Ps (product, place, price, promotion) and The Four Cs (customer solution, cost, convenience and communication)

  • Managing The Marketing Effort
  • Marketing Analysis provides information for planning, implementation, and control
  • Marketing Planning are strategies and tactics
  • Marketing Implementation turns plans into action
  • Marketing Control: operating control and strategic control

THE MARKETING MIX

CREATING CUSTOMER VALUE SATISFACTION

Customer Value - how much a product or service is worth to a customer

CREATING CUSTOMER VALUE

  1. Understand The Marketplace, Customer Needs and Wants (Research, and manage marketing information and customer data)
  2. Design a Customer Driven Marketing Strategy (select customers to serve, and design a value proposition)
  3. Construct an Integrated Marketing Programme (design, brand, place, communication)
  4. Build Profitable Relationships and Create Delight
  5. Capture Value from Customers to Create Profit and Customer Equity

Delivering customer value is key to maintaining long term relationships with existing customers and earning repeat business.

Creating customer value increases customer satisfaction and experience

9 WAYS TO INCREASE CUSTOMER VALUE:

  1. Have clear vision of customer experience strategy and what you want to communicate to them
  2. Understand who your customers are
  3. Get customer feedback
  4. Get feedback from employees
  5. Act upon feedback and inform customer when a change is made
  6. Invest in teams, technology, and business processes
  7. Automate and measure the ROI it gives

Perceived Value - The customer’s evaluation of the difference between benefits and costs

  • Customers often do not judge values and costs accurately and objectively
  • In marketing terminology, perceived value is the customers’ evaluation of the merits of a product or service, and it’s ability their needs and expectations, especially in comparison with it’s peers

Determinants Of Customer Perceived Value

Total Customer Benefit

  1. Product benefit
  2. Service benefit
  3. Personal benefit
  4. Image benefit

Total Customer Cost

  1. Monetary cost
  2. Time cost
  3. Energy cost
  4. Psychological cost

Loyalty - a deeply held commitment re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching position

Brand Loyalty Factors:

  1. Product quality
  2. Brand image
  3. Perceived value
  4. Switching cost
  5. Availability and service
  6. Customer psychology

Value Proposition - cluster of benefits the company promises to deliver

  • A simple statement that summarizes why a customer would choose your product or service

Customer Value Propositions

  1. Who is the target audience
  2. What kind of solution do they seek
  3. Why choose this solution
  4. How will this difference be delivered
  5. How much will they pay
  6. What do they not get that others provide

Tips on how to write a value proposition:

  1. Clarify the purpose and vision of your company
  2. Research your audience
  3. Conduct a competitive analysis
  4. Jot down the benefits

A value proposition is not:

  1. An Incentive; Incentive - positive motivational influence designed to incentivize a visitor to act right away. They are not value propositions
  2. A Catchphrase - a slogan or tagline; group of words combined in a special way
  3. A Positioning Statement - expression of how a given product, service, or brand fills a particular consumer need in a way that it’s competitors don’t. This ia a subset of a value proposition

Customer Satisfaction - product’s perceived performance relative to customer’s expectations

Product and Service Quality - quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy needs

Total Quality Management - an organization-wide approach to continuously improve the quality of all the organization's

processes, products, and services

Framework for Customer Relationship Management

Identify prospects and customers → differentiate customers by needs and value to company → interact to improve knowledge → customize for each customer

CRM Strategies

  • Reduce rate of defection
  • Increase longevity
  • Enhance ‘share of wallet’
  • Terminate low profit customers
  • Focus more effort on high profit customers

Mass Marketing

  1. Average customer
  2. Customer anonymity
  3. Standard product
  4. Mass production
  5. Mass advertising
  6. One way message
  7. Economies of scale

One-on-One Marketing

  1. Individual customer
  2. Customer profile
  3. Customized market offering
  4. Customized production
  5. Economies of scope
  6. Share of customer

PREPARATION FOR EMPLOYMENT

Application Letter

  • “cover letter”
  • A document that accompanies your resume when applying for a job

Importance:

  1. Introduces you to the employer
  2. Highlights your qualifications
  3. Shows your interest in the position
  4. Demonstrates your communication skills
  5. Sets yourself apart from other applicants

How To Write An Application Letter?

  1. Research the company and job opening
  2. Use a professional format
  3. State the position you’re applying for
  4. Summarize your qualifications
  5. Mention why you want the job
  6. Include a professional closing

Mock Job Interview - provides a stimulated interview experience that allows individuals to practice answering common interview questions, gain confidence, and receive feedback on their performance