Chapte r 3: The Role of Mark e tin g in Stra te gic Planning

CHAPTER OBJECTIVES Explain companywide strategic planning Understand the concepts of stakeholders, processes, resources, and organization. Explain the four planning activities of corporate strategic planning Understand the process involved in defining a company mission and setting goals and objectives. Discuss how to design business portfolios and growth strategies Explain the steps involved in the business strategy planning process.

STRATE IC P!A""I"
Marke t# Oriente $ Stra te gic Planning is the process of developing and
maintaining a feasible fit between the organization s objectives, skills, and resources and its changing marketing opportunities.

The Ai% of Strate gic Planning

!trategic planning helps an organization select and organize its business in a way that keeps the organization healthy despite unexpected upsets occurring in any of its specific business or product lines.

Rea&on& for Planning

"he essence of strategic planning is the consideration of current decision alternatives in the light of their probable conse#uence over time. "he future is unpredictable but it is not a random walk. $f we do not know where we are going any road will take us there.

Three 'e( I$ea& for Stra te gic Planning

)* %anaging a company s business as an in+e&t % e n t portfolio* ,* &ssessing accurately the f-t-r e profit poten ti al of each business by considering the market s growth rate and the company s competitive position and fit. 3* Underlying strategic planning is that of strategy and developing a ga%e plan for achieving long' run objectives.

.o-r Ma/or Organi0a tional !e+el&

Corporat e !e+el : (orporate strategic plan to guide the whole enterprise. 1i+i&ion !e+el : Division plan allocates funds to each !)U. B-&ine&& 2nit !e+el : )usiness unit strategic plan. Pro$-ct !e+el : %arketing plan.

"at-r e of High Perfor % a nce B-&ine&&

Stakehol $er : !atisfy the minimum expectations of each stakeholder group, such as customers, employees, suppliers and distributors. Proce&&e& : )uild cross- functional teams that manage core business processes to be superior competitors *Example+ ,as -egas .ilton/ Re&o-rce& : %ore companies decide to outsource less critical resources *personnel, material, machines, and information/ Organi0a ti on : (ompanies align their organization s structure, policies, and culture to changing re#uirements of business strategy.

CORPORATE STRATE IC P!A""I"

(orporate head#uarters has the responsibility for setting into motion the whole planning process. "he hospitality industry faces the need for greater empowerment of employees "he .0" industries are international and multicultural in nature

.O2R P!A""I" ACTIVITIES 2"1ERTA'E" B3 CORPORATE HEA142ARTERS:

)* ,* 3* 5* Defining the corporate mission. Establishing strategic business units. &ssigning resources to each !)U. Developing growth strategies

STRATE IC MA"A EME"T MO1E!

HIERARCH3 O. STRATE 3

CORPORATE MISSIO"
1hat business are we in2 1hat businesses should we be in2 1hat do we do best2 1hat are the values3ethics of the firm2 1hat are the target markets of the firm2 Define business by need rather than product. o ,odging vs. hotel o 4uick service restaurants vs. fast food hamburgers.

MISSIO" STATEME"TS: MAJOR COMPETITIVE SCOPES

MISSIO" STATEME"T
A Mi&&ion State % e n t provides employees of the organization with a shared sense of purpose, direction, and opportunity. Mi&&ion State % e n t & should . . . !erve as a guide for what the organization wants to accomplish. )e 5market' oriented6 rather than 5product' oriented6. )e neither too narrow, nor too broad. )e motivating. Mi&&ion State % e n t & -i$e the development of objectives and goals.

MISSIO" STATEME"T E6AMP!ES

7A!# MART: 5"o offer all consumers in our territories all of their household
needs in a manner in which they continue think of us fondly6. MC1O"A!1S: 5"o offer the fast food customer food prepared in the same high #uality manner worldwide, tasty and reasonable priced, delivered in a consistent, low' key decor and friendly atmosphere6.

ESTAB!ISHI"

STRATE IC B2SI"ESS 2"ITS

)* & business must be viewed as a customer' satisfying process, not a goods' producing process. ,* (ompanies should define their business in terms of customer needs, not products. 3* (ompanies have to identify those of its businesses that they must manage strategically *Example+ .oliday $nns, "railways and Delta !teamship Experience/.

CHARACTERISTICS O. A STRATE IC B2SI"ESS 2"IT 8SB29 (ompanies have to identify those of its businesses that they must manage strategically. "hese businesses are called &trate gic :-&ine&& -nit& . )* $t is a single business or collection of related businesses that can be planned for separately from the rest of the company. ,* $t has its own set of competitors. 3* $t has a manager who is responsible for strategic planning and profit performance and who controls most of the factors affecting profits. ASSI "I" RESO2RCES TO EACH SB2
)* &nalytical tools are needed for classifying businesses by profit potential, for decisions on whether to :-il$; %aint ai n; har+e&t , or $i+e&t individual !)Us. ,* 7ne well' known business portfolio evaluation models is the Bo&ton Con&-lting ro-p 8BC 9 growth3share matrix.

BC

RO7TH<SHARE MATRI6

A"A!3=I" C2RRE"T SB2>S: BOSTO" CO"S2!TI" RO2P APPROACH

BC

ro?th<Share Matri@

1hat objective, strategy and budget to assign to each !)U. 8our alternative objectives can be pursued for each !)U+ B-il$: $ncrease !)U s market share. Hol$: 9reserve !)U s market share. Har+e&t: $ncrease short' term cash flow. 1i+e&t: !ell or li#uidate.

1EVE!OPI" RO7TH STRATE IES A"SO.. PRO12CT# MAR'ET E6PA"SIO" RI1

1EVE!OPI"

RO7TH STRATE IES

within the company s current

Inten&i+e gro? t h oppor t -ni t i e& $dentify further opportunities to achieve growth

business. Marke t penet r a t i o n &trat e g( *$ncrease in existing market : with existing products/ Marke t $e+eloping &trat e g( *,ook new markets with current products/. Pro$-ct $e+elop% e n t &trat e g( *;row in existing market with modified or new products/

1EVE!OPI" RO7TH STRATE IES 1i+er&ification gro?th opport-ni ti e&: $dentify opportunities to add attractive businesses that are unrelated to the company s current businesses. Concentric $i+er&ifica tion &tra te g (: (ompany seeks new products that have technological and3or marketing synergy with existing product lines, even though the product may appeal to a new class of customers. 1EVE!OPI" RO7TH STRATE IES Hori0ontal $i+er&ification &trate g(: (ompany searches for new products that could appeal to its current customers though technologically unrelated to its current product line. *Ex. !elling perfume, "'shirts/ Conglo% er a t e $i+er&ification &trate g(: <ew business with no relationship to the current technology, products, or markets. *Ex+ selling retirement homes/. 1EVE!OPI" RO7TH STRATE IES Integr a ti + e gro?th opport-nitie& Back?ar $ integr a tion: & hotel company ac#uiring one of its suppliers. *Ex+ %arriott =estaurant Distribution !ystem/ .or?ar $ integr a tion: & hotel company ac#uiring tour wholesaler or travel agents. Hori0ontal integr a tion: & hotel company ac#uiring one or more competitors, provided the government does not bar the move. I"TE RATIO" RO7TH

B2SI"ESS STRATE 3 P!A""I" STEPS )* B-&ine&& %i&&ion Specific %i&&ion of each SB2 ,* S7OT Anal(&i& 3* Inter na l en+iron% e n t anal(&i& *strengths and weaknesses/ B2SI"ESS STRATE 3 P!A""I" 5* E@ternal en+iron% e n t anal(&i& *opportunities and threats/ >ey macro environmental forces !ignificant %icro environmental forces A* oal .or%-la tion (What do we achieve?) ;oals should arise from business analysis, not from wishful thinking. %easurable goals 9rofitability, sales growth, market share B* Strate g( .or%-la tion (How do we get there?) Every business must tailor a strategy for achieving its goals %ichael 9orter s three generic types of strategy+ 7verall cost leadership Differentiation 8ocus on narrow market segments !trategic &lliances+ partnership with domestic or multinational companies that complement or leverage their capabilities and resources to achieve leadership nationally or globally. C* Progra % for%-la tion* & company must develop hiring, training, advertising, and other programs to support its strategy. D* I%ple % e n t a t ion * & firm must communicate its strategy to its employees and it must have the resources to carry out its strategy. E* .ee$:ack an$ control are absolutely necessary to track results and monitor new developments in the environment.