Strategic Planning Chapter 2 Flashcards

Study Notes

Strategic Business Units (SBUs)

SBUs are subgroups or collections of related businesses within a larger organization.
Each SBU has a distinct mission, specific target market, and control over its resources.
Operates independently with its competitors and profits as a "profit center."

Customer Types Classification

Current customers are those actively purchased.
Competition's customers include ex-customers who switched away and non-users who never tried the product.

Ansoff's Opportunity Matrix

A tool to determine strategic direction by matching products with markets.
Four strategies:
- Market Penetration: Increasing share among existing customers.
- Market Development: Expanding into global markets (e.g., McDonald's).
- Product Development: Introducing new products for existing markets (e.g., healthier options by McDonald's).
- Diversification: Entering new product markets (e.g., CVS, Avon).

Portfolio Matrix – BCG

Used to determine future cash flow and requirements for each SBU based on market share and profitability.
Key categories:
- Star: Fast-growing leaders needing reinvestment.
- Cash Cow: Generates more cash than needed for maintenance.
- Problem Child: Rapid growth but poor margins requiring significant investment.
- Dog: Low growth and low market share, typically to be divested or harvested.

Marketing Plan

A structured document guiding marketing activities and decision-making.
Important for analyzing marketing environments and success metrics.

SWOT Analysis

A situational analysis tool identifying internal strengths, weaknesses, and external opportunities, threats.
Focus on organizational resources, skills, and environmental scanning.

Identifying Opportunities and Threats

Marketing strategies arise from environmental scanning across six forces: political/legal, economic, social, technological, demographic, and competitive.

Competitive Advantage

Achieved by surpassing competition in key areas perceived by target markets as superior.
Found in underserved market segments for opportunities.

Sources of Sustainable Competitive Advantage

Includes patents, copyrights, location, technology, customer service, and promotion.

Types of Competitive Advantage

Cost advantage involves being the low-cost competitor while maintaining profit margins.
Differentiation focuses on unique product/service offerings beyond lower prices.
Niche strategy effectively serves a specific market segment.

Describing the Target Market

Selecting and describing a specific target market and its marketing mix.

Target Market Strategy

Involves market segmentation based on shared characteristics.
Options include targeting the entire market or concentrating on specific segments.

Market Segmentation

Defines potential target markets based on specific characteristics.

Marketing Mix

Comprises the unique combination of product, place, promotion, and pricing strategies tailored to target market needs.

The "Four Ps" of Marketing Mix

Product involves tangible goods, ideas, or services.
Place refers to product availability and logistics for reaching customers.
Promotion engages target markets through informing, educating, and persuading.
Price represents the cost to acquire the product and acts as a competitive tool.

Steps in Marketing Plan Implementation

Implementation: Translates marketing plans into actionable assignments.
Evaluation: Assesses achievement of marketing objectives over time.
Control: Mechanisms for evaluating results, adjusting actions, and managing marketing resource allocations.

Description

Explore key concepts from Chapter 2 on strategic planning for competitive advantage. This quiz includes essential definitions and characteristics of Strategic Business Units (SBUs) necessary for understanding their role in organizations. Test your knowledge and sharpen your strategic thinking skills.