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Where are we?

This analysis focuses on understanding the market segmentation and criteria influencing consumer purchasing decisions, as well as competition, economic and technological trends impacting demand, pricing, product design, and positioning. SWOT analysis, strategic planning, and performance assessment are used to evaluate company, consumer, competitor, and market conditions. Financial questions are asked to assess profitability, liquidity, leverage, asset utilization, return on investment, bankruptcy risk, bond ratings, and investment levels in plant, people, and processes. The three levels of strategic management are explored: corporate-level, business-level, and functional-level strategies. Growth strategies, resource allocation models, and competitive advantage are also discussed.

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Where are we?

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  1. Where are we?

  2. Consumers Competitors Conditions You are finding answers re: • How the market is segmented & the relevant criteria that influence consumers use in their purchasing decisions • The nature & magnitude of the competition • Existing & emerging Economic & Technological trends that will impact demand, pricing, product design & positioning

  3. Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment • Company • Consumers • Competitors • Conditions • PEST Functional Integration • Profits • Mrkt Share • ROA • ROS • ROE • Asset T/O • Stock • Mrkt Cap Marketing Growth &Competitive Strategies R&D Production HR Finance NEXT STEP

  4. 1st Big Q How good are your goods…

  5. Next Big Q How good are you in making your goods…

  6. Key Financial Q’s: • Are You Making Enough Profit? • Liquidity? Enough Money on hand to run/grow your co. • Leverage? ideally proportioned betw. Debt & Equity? • How effectively are you utilizing your assets? A/T • R U providing your investors an Adequate Level of Return? • How close are you to Bankruptcy? • How’s those Bond Ratings? • Do you have Adequate Levels of Investment in your Company's Plant, People & Processes?

  7. Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment • Company • Consumers • Competitors • Conditions • PEST Functional Integration • Profits • Mrkt Share • ROA • ROS • ROE • Asset T/O • Stock • Mrkt Cap Marketing Growth &Competitive Strategies R&D Production HR Finance But 1st

  8. Corporation Sensors Unit Nano-Tech Unit Cons.Elec. Unit Finance Production Marketing HR / R&D 3 Levels of Strategic MGT Corporate-Level :In what business should we compete? Business-Level: How should we compete? Functional-Level : How do we coordinate?

  9. Level 1-Corporate Strategy In which businesses do we compete? Corporation Consumer Security Services Sensors Unit Nano-Tech Unit ?

  10. Decide what business(es)want to be in … what Products to competewith… What Markets to compete in… Growth Strategy

  11. Growth Strategies Present Products New Products Market Penetration- Increase share among existing customers. Product Development Create new products for present markets Present Markets Market Development Attract new customers to existing products New Markets Diversification new products… new markets… new alliances

  12. Corporation Sensors Unit Nano-Tech Unit Cons.Elec. Unit Finance Production Marketing HR / R&D Next Level of Strategic MGT Corporate-Level :In what business should we compete? Business-Level: How should we compete? Functional-Level : How do we coordinate?

  13. STRATEGIC BUSINESS UNIT MARKET COMPETITOR COMPETITOR COMPETITOR A B C Business Unit Strategy: How do we Compete? Focus? Price? Quality?

  14. What Advantage can we create & sustain against our competitors? & w/in which Market Segments should we compete?

  15. Strategic Thinking- the ten big ideas 6. Resource allocation models – • Porter: strategic choices are set of basic generic strategies • (low cost, differentiation, market focus)

  16. Porter “What is Strategy” “If you don’t know where you are going any road will get you there.”Lewis Carroll,-- Chapter 6, Alice in Wonderland

  17. Cost: Design, produce, market more efficiently than competitors You can Formulate Strategy based on what Competitive advantage you focuson: Differentiation: Deliver unique & superior value in terms of product quality, features, service

  18. You can also Formulate Strategy by:Competitive Scope/ MARKET FOCUSNumber & Nature of segments compete w/in-

  19. & You can also Formulate Strategy by-Riding a Products Life Cycle • Adjust Marketing Mix according to natural Drift of products w/in segments-

  20. Competitive Strategy Matrix Number & nature of segments compete w/in Ride Product LifeCycle #2 #3 Compete on: Broad Market Niche Mrkt Evolving Mrkt Cost #1 Product Quality

  21. Competitive Strategy Matrix Broad Mrkt Niche Mrkt Evolving Mrkt Compete on: Cost Product Quality

  22. Strategic Choice: Cost Leadership • Overriding goal = increased efficiency & lower costs relative to rivals • Minimize costs(Marketing, R&D & Production..) • Advantages • A cost leader able to charge lower prices • Even at same price- greater profitability

  23. Strategic Choice: Differentiation Create a product that customers perceive as distinct/unique & offer superior quality/service Advantage Customers expect & willing to pay premium prices

  24. Strategic Choice: Differentiation Greater Equity = Greater loyalty = Less price sensitivity • Will have significant expenditures in R&D & production…. want/need to make high quality/highly desirable product • Significant expenditures in marketing… develop greater brand equity —thru increased awareness of product quality

  25. 3rd Level of Strategy Corporate Level Business unit Level Functional Strategy Information systems Research & development Manufacturing Finance Marketing Human resources

  26. Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment The Big Picture • Company • Consumers • Competitors • Conditions • PEST Marketing Growth &Competitive Strategies • Profits • Mrkt Share • ROA • ROS • ROE • Asset T/O • Stock • Mrkt Cap R&D Production HR Finance

  27. INTERNAL STRATEGIC ALIGNMENT FINANCE Achieved when : All Decisions made by & within all functional areas are in sync w/ one another, As well as with the overall strategic direction of the firm PRODUCTION MARKETING

  28. Examples of Strategic Alignment

  29. Distinctive Competencies When all decisions made by & within all functional areas are in sync w/ one another, As well as w/ your overall strategic direction -- you achieve… Distinctive Competencies

  30. Distinct competencies needed to achieve selected competitive strategy Competitive Advantage* Distinctive Competencies *Achieved when you sustain profits above Industry Average

  31. Areas in which you can develop “Distinct Competencies” • MARKETING: Awareness & Accessibility • R&D: Product innovation & design • PRODUCTION: Plant Automation & utilization • Human Resources: Worker Expertise & Training

  32. Achieving Competitive Advantage thru Cost-Focused Strategy • Allows for good profit margins on sales while keeping prices low especially in price-sensitive segments… Functional Alignment

  33. Differentiator • Seeks to create maximum awareness & brand equity. • Wants to be well known as a maker of high quality/highly desirable products Functional Alignment

  34. Select one of the Six Basic Strategies

  35. Now Evaluate How good are your goods…

  36. Strategic Thinking- the ten big ideas 4. Portfolio theory- GE-(three-by-three matrix, using business strength & market attractiveness as variables). The Boston Consulting Group (BCG) introduced its two-by-two matrix-(invest in the stars, divest the dogs, milk the cows, and solve the question marks)

  37. Portfolio Analysis Which Brands should receive more/ less/ no investment-Based on: • Product Position/ Potential • Profitability/ Margins • Market-Growth/Market-Share Matrix • Competitive Strategy

  38. G.E Strategic Planning Model Business Strength Strong Average Weak High Low Industry Attractiveness Business Strength IndexIndustry Attractiveness Index * Market Share * Market size * Price Competitiveness * Market Growth * Product Quality * Industry Profit Margin * Customer Knowledge * Amount of Competition * Sales Force and Effectiveness * Seasonality * Geographic Advantage * Cost Structure

  39. STARS PROBLEM CHILD CASH COWS DOGS Boston Consulting Group’s Growth-Share Matrix High Product-Market Growth (%) Low 10x 4x 2x 1.5x 1x .5x .2x.1x Relative Market Share High Low

  40. R U Meeting Consumers’ Expectations?

  41. Evaluate Your Company’sMarketing Situation & Develop Your Brand Plans

  42. Product Place Target & Position Price Promotion You’re will be responsible for: As MARKETING MANAGER Planning, implementing & controlling your marketing strategy

  43. Marketing Managers become one-w/ Relationships betw • Price & demand • Price & margin • Promotion budget & awareness • Sales budget & accessibility • A/R policy & demand

  44. Marketing also selects media vehicles & message weights • AND determines composition of sales/distribution staff ..and allocation of their efforts by segment & Brand

  45. A B Performance As R&D Mgr SIZE Responsible for: • Product Position • Age & Quality • New product development High High Eight < < < Low Low One Quality Age Prdt Line

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