Strategic Planning in Business

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