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Questions and Answers
What is the focus of a market-oriented approach?
What is the focus of a market-oriented approach?
What is the goal of Google's mission?
What is the goal of Google's mission?
What are the components of an objective in marketing strategy?
What are the components of an objective in marketing strategy?
What is the primary purpose of a business portfolio?
What is the primary purpose of a business portfolio?
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Which of the following is a possible measure of innovativeness in marketing strategy?
Which of the following is a possible measure of innovativeness in marketing strategy?
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What is the significance of a time frame in setting marketing objectives?
What is the significance of a time frame in setting marketing objectives?
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What is the primary purpose of a corporate strategy?
What is the primary purpose of a corporate strategy?
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What is the primary benefit of a good mission statement?
What is the primary benefit of a good mission statement?
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What is the main focus of a business unit strategy?
What is the main focus of a business unit strategy?
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What is the primary goal of a marketing strategy?
What is the primary goal of a marketing strategy?
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What is the main focus of functional planning?
What is the main focus of functional planning?
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What is the Business Domain Choice framework used for?
What is the Business Domain Choice framework used for?
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What type of businesses are associated with negative cash flow?
What type of businesses are associated with negative cash flow?
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What is the purpose of the 'Harvest' strategy for an SBU?
What is the purpose of the 'Harvest' strategy for an SBU?
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What is the limitation of the BCG Matrix in terms of planning?
What is the limitation of the BCG Matrix in terms of planning?
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What is the 'Build' strategy for an SBU?
What is the 'Build' strategy for an SBU?
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What is the characteristic of a 'sick' portfolio in the BCG Matrix?
What is the characteristic of a 'sick' portfolio in the BCG Matrix?
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Which of the following is an example of a 'Hold' strategy in Unilever's portfolio?
Which of the following is an example of a 'Hold' strategy in Unilever's portfolio?
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What is a limitation of the BCG model?
What is a limitation of the BCG model?
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What is the primary objective of market penetration strategies?
What is the primary objective of market penetration strategies?
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What type of diversification involves expanding into unrelated businesses?
What type of diversification involves expanding into unrelated businesses?
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What is the primary goal of product development strategies?
What is the primary goal of product development strategies?
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What is the primary benefit of market penetration strategies?
What is the primary benefit of market penetration strategies?
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What is the focus of market development strategies?
What is the focus of market development strategies?
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What is a characteristic of a Strategic Business Unit (SBU)?
What is a characteristic of a Strategic Business Unit (SBU)?
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What is an ideal characteristic of a Strategic Business Unit (SBU)?
What is an ideal characteristic of a Strategic Business Unit (SBU)?
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What is the responsibility of leaders in a Strategic Business Unit (SBU)?
What is the responsibility of leaders in a Strategic Business Unit (SBU)?
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What is the purpose of a mission statement?
What is the purpose of a mission statement?
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What is a characteristic of a well-defined mission statement?
What is a characteristic of a well-defined mission statement?
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Study Notes
Low-Growth Markets and Business Unit Strategies
- Low-share businesses in low-growth markets have low or declining market share and are associated with negative cash flow.
- Strategies that can be followed for each SBU:
- Build: Invest more
- Hold: Invest enough to hold current position
- Harvest: Milking short-term cash flow
- Divest: Phasing out
Growth-Share Matrix
- Helps to analyze a company's portfolio of businesses
- Provides a framework for evaluating the strength of each business unit
- Examples of companies that have used the BCG Matrix: Unilever
Limitations of the BCG Matrix
- Difficult to implement, especially when defining SBUs and measuring market share and growth
- Classifies current businesses but provides little advice for future planning
Corporate Strategy
- Hierarchical nature of strategy: Corporate, Business Unit, and Functional
- Frameworks for corporate strategy:
- Business Domain Choice: What is our business? What will be our business? What should be our business? What can be our business?
- Growth Opportunity Matrix: Evaluates business units based on market growth rate and relative market share
Corporate Mission
- Statement of the organization's purpose
- Serves as a guide for what the organization wants to accomplish
- Characteristics of a good mission statement:
- Market-oriented rather than product-oriented
- Realistic and specific
- Fits the environment, based on company competencies
- Motivating for employees
Examples of Mission Statements
- Google: To organize the world's information and make it universally accessible and useful
- Southwest Airlines: To provide a low-cost, high-quality service to customers
Goals and Objectives
- Components of an objective:
- A performance dimension
- A measure or index for evaluating progress
- A target level to be achieved
- A time frame within which the target is to be accomplished
- Examples of performance criteria:
- Growth
- Competitive strength
- Innovativeness
Business Portfolio
- The collection of businesses and products that make up the company
- Limitations of the BCG Matrix:
- Too simplistic
- May be risky to take immediate decisions/actions
- Assumes business units are independent of one another except for the flow of cash
Growth Opportunity Matrix
- Evaluates business units based on market growth rate and relative market share
- Strategies for growth:
- Market penetration
- Market development
- Product development
- Diversification
Strategic Business Units (SBUs)
- A single business or collection of related businesses
- Characteristics of SBUs:
- A homogeneous set of markets to serve with limited number of related technologies
- A unique set of product-markets
- Responsibility for their own profitability
Exercise: Identifying SBUs
- Example: Which SBUs would you identify in a company?
- Why?
- What mission would you write for each SBU?
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Description
Test your understanding of corporate strategy and its hierarchical nature, including corporate mission, business unit strategies, and functional decisions. Learn how to analyze a company's scope and resource deployments across its divisions or businesses.