Strategic Planning in Business

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Questions and Answers

What is the purpose of strategic planning?

Find ways to use company strengths to take advantage of opportunities

What are the components of strategic planning?

Analysis of strengths & weaknesses (correct)

Identification of opportunities & threats (correct)

Corporate and business unit strategies (correct)

Organizational goals and mission (correct)

SWOT analysis evaluates a company's internal factors only.

False

SWOT analysis stands for Strengths, Weaknesses, Opportunities, and __________.

Threats Signup and view all the answers

Explain Market Development in Ansoff's Product/Market Matrix.

Marketing existing product range in a new market Signup and view all the answers

What is the main focus of the Balanced Scorecard's Learning and Growth perspective?

Employee training and development Signup and view all the answers

Which option on Bowman’s Strategy Clock involves Feasibility only in a monopoly situation?

Option 7 – Increased Price/Low Values Signup and view all the answers

Core competencies are resources that give a company a competitive ________ over its competition.

advantage Signup and view all the answers

Match the following objectives and measures to the correct categories on the Balanced Scorecard: Objective: 1.To be the cost leader in its market by 2010 2.To reduce customer churn by 75% within 12 months 3.To lead the market in speedy delivery by 2014 4.To build a sports and social club by March 2014 5.To increase profitability by 20% by 2015 6.To produce products that are right first time within 3 months 7.To train and develop all team leaders by 2016 8.To achieve 99% customer satisfaction within 5 years

Measures: a.Average time taken for customers to receive complete orders b.Customer retention rates c.Return On Capital Employed (ROCE) d.Employee satisfaction rates e.Statistical process control f.Employee retention rates g.Customer feedback or complaints h.Unit cost

Objective 1 = h Objective 2 = b Objective 3 = a Objective 4 = d Objective 5 = c Objective 6 = e Objective 7 = f Objective 8 = g Signup and view all the answers

What tool helps marketing managers decide which marketing strategies and tactics to use by analyzing where the company is and where it wants to be?

Gap Analysis Signup and view all the answers

What is the next step in using Gap Analysis?

Close the gap Signup and view all the answers

Which tool can be used to bridge the gap with strategies?

Ansoff’s matrix Signup and view all the answers

McKinsey/General Electric Business Screen Matrix uses market attractiveness instead of market growth as a factor.

True Signup and view all the answers

___________ are some of the factors affecting market attractiveness.

Market Size, Market Growth, Market Profitability, Pricing Trends, Competitive Intensity/Rivalry, Industry Overall Risk of Returns, Opportunity to Differentiate Products & Services, Segmentation, Distribution structure Signup and view all the answers

Match the following resources affecting competitive strength with their descriptions:

Strength of Assets and Competencies = Factors like relative brand strength and market share Market Share = Indicator of market presence and reach Customer Loyalty = Measure of customer retention and repeat business Distribution Strength = Ability to effectively reach and serve customers through distribution channels Record of Technological or Other Innovation = History of advancements in technology or other areas Access to Financial & Other Investment Resources = Availability of funds and capital for growth and development Signup and view all the answers

Study Notes

Here are the study notes:

Strategic Planning

Identifying and analyzing a target market to take advantage of opportunities
Developing a marketing mix to meet the needs of the market

Components of Strategic Planning

Analysis of the organization's strengths and weaknesses
Identification of opportunities and threats
Organizational goals and mission
Corporate and business unit strategies
Functional strategies (marketing, production, finance, human resources)

Marketing Objectives and Goals

Sales volume
Profitability
Market share
Pricing
Distribution
Advertising
Employee training

Core Business Processes

Market sensing process (gathering market intelligence)
New offering realization process (research, development, and launch of new offerings)
Customer acquisition process (defining target markets and prospecting for new customers)
Customer relationship management process (building relationships with customers)
Fulfillment management process (meeting and fulfilling orders)

Holistic Marketing Framework

Customer focus
Core competencies
Collaborative network
Value creation, delivery, and communication
Customer relationships and benefits
Business domain
Partners and alliances

The Strategic Planning, Implementation, and Control Processes

Planning (setting goals and objectives)
Implementing (organizing and allocating resources)
Controlling (measuring and correcting)

Business Unit Strategic Planning

Analyzing the external environment (opportunities and threats)
Analyzing the internal environment (strengths and weaknesses)
Establishing mission and goals
Formulating strategy
Implementing and controlling

Portfolio Analysis Methods

SWOT analysis (strengths, weaknesses, opportunities, and threats)
Boston Consulting Group approach (dogs, cash cows, question marks, and stars)
Arthur D. Little strategic condition matrix
Ansoff's product/market matrix
Balanced scorecard
Bowman's strategy clock
Core competencies
Gap analysis
McKinsey/General Electric business screen matrix
McKinsey growth pyramid
Generic strategies
Shell directional policy matrix
Value chain analysis### Core Competencies
Core competencies are a combination of circumstances and timing that allow a company to reach a target market
Core competencies are matched to opportunities, providing a strategic window or temporary period of optimal fit between key market requirements and a company's capabilities
A core competence should be unique, something others wish they had, and central to a business's operations
A competence that is not exceptional in some way is not a core competence, as it won't differentiate the business from others

Three Tests of Core Competencies

Provide potential access to a wide variety of markets
Make a significant contribution to the perceived customer benefits of the end product
Are difficult for competitors to imitate

Core Competencies and Resources

Resources that are standardized or easily available won't enable a business to achieve a competitive advantage
Core competencies can become core rigidities, causing organizational inertia and preventing companies from responding to environmental changes

Gap Analysis

A tool to help marketing managers decide which marketing strategies and tactics to use
Answers two questions: "Where are we now?" and "Where do we want to be?"
The difference between the two is the gap
Uses Ansoff's matrix to bridge the gap using strategies

McKinsey Growth Pyramid

Similar to Ansoff's matrix, but looks at growth strategy from a different perspective
Growth strategy should be based on operational skills, privileged assets, growth skills, and special relationships
Ways of achieving growth include:
- Increasing sales to existing customers
- Finding new products customers might buy
- Taking a risk by developing and marketing new products
- New delivery approaches using new or emerging channels of distribution
- Expanding to new geographical areas
- Acquiring growth through acquisition of healthy competitors
- Vertical integration
- Looking into other industries where competencies can be used

Value Chain Analysis

Tool developed by Michael Porter to examine various activities of a company and how they interact to provide a source of competitive advantage
Break down a market or organization into key activities under major headings
Assess the potential for adding value through cost advantage or differentiation
Identify current activities where a business looks to be at a competitive advantage
Determine strategies built around focused activities where competitive advantage can be sustained
Identifies resources and capabilities that can add value

Value Chain Analysis Activities

Primary Activities:
- Inbound Logistics
- Operations
- Outbound Logistics
- Marketing and Sales
- Service
Support Activities:
- Procurement
- Technological Development
- Human Resource Management
- Firm Infrastructure

Value Chain Analysis Use

Used to observe a company's activities and how they interact with each other
Tool for observing how the company's activities and their interaction affect each activity's cost and performance
By performing these activities better or at a lower cost than competitors, a company gains competitive advantage

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Description

This quiz covers the purpose and steps of strategic planning in business, including identifying market opportunities and developing a marketing mix to meet target market needs.