strategic planning - lecture 3

Question 1

what is strategic planning?

Answer 1

• Strategic planning is designed to provide an organization, its divisions, departments or even individual players with a game plan or road map to achieve specific goals and objectives
• developing and maintaining a strategic fit between the organisations goals and capabilities and its changing marketing opportunities

Question 2

why is a strategic plan needed?

Answer 2

the absence of a plan can mean that companies are more likley to fail

Question 3

what are the components of the strategic plan?

Answer 3

• company mission
• company objectives
• portfolio analysis
• planning marketing and other functional stategies
• implementation, feedback and control

Question 4

what are the two aspects of strategy?

Answer 4

• cooperate strategy
• marekting strategy
  (linked, not separate things, can’t formulate one without the other)

Question 5

what is the cooperate strategy?

Answer 5

helps control, direct and coordinate the different areas in a corporation such as finance, marketing, production
cooperate level strategy affects the whole business

Question 6

what is the marketing strategy?

Answer 6

operationalise the corporate strategy, inform and achieve cooperate strategy, audit of environment, inform cooporrete strategy that changes may be needed in the direction of the corporate strategy

Question 7

what is meant by the mission statement?

Answer 7

• short statement explains the purpose of the company
• mostly set by top management/founder
• think about what business are you in (needs/wants/demographics) /what are we in business for (profit/moral/social contribution) / what sort of business are we in

Question 8

why is a mission statement so important?

Answer 8

if it is unclear or outdated (must be revamped) it can send the wrong image about your business
- it leads to strategic planning, if planning not aline with missions statement then something has gone wrong

Question 9

who can be used in order to help the question ‘what sort of business are we in?’ - mission statement

Answer 9

Porters Generic Strategies

Question 10

what is included in porters generic strategies?

Answer 10

- strategic advantage 
cost leadership (efficiency / low cost airlines) 
differentiation (innovation e.g. dyson) 
- strategic target 
industry wide (whole market) 
focus (tailor a particular need)

Question 11

what is wrong with Porters Generic strategies?

Answer 11

not that flexible

Question 12

what should a mission statement be?

Answer 12

• realistic
• specific
• based on distinct competencies
• motivating (for employees as well, tele them what they are working towards)

Question 13

what is TEDs mission statement?

Answer 13

spread ideas

Question 14

what is the second component of strategic planning?

Answer 14

company objectives

Question 15

what are the company objectives?

Answer 15

what the company is setting out to achieve

need to take into account the audit and SWOT analysis at a company level in order to do these

Question 16

what must company objectives be?

Answer 16

• specific (e.g. achieve 6% organic growth)
• measurable (so you can see whether you’ve achieved them)
• attainable (realistic)
• Time

Question 17

what is the third stage in the strategic planning?

Answer 17

portfolio analysis

Question 18

what is a business portfolio?

Answer 18

the collection of businesses and products that make up a company
(a small company may not have one)

Question 19

what should a business portfolio match?

Answer 19

the strengths and weaknesses to opportunities in the environment

Question 20

using the business portfolio what must companies do?

Answer 20

• analyse the current business portfolio

- develop growth strategies

Question 21

what is portfolio analysis?

Answer 21

a major activity in strategic planning whereby management evaluates the products and businesses that make up a company

Question 22

what are the steps in analysing current portfolio?

Answer 22

1) identify key businesses (strategic business unit)
2) assess attractiveness
3) decide how much support each SBU needs

Question 23

what is an example of someone that has SBUs?

Answer 23

Pepsico

kfc, taco bell

Question 24

what model can be used to analyse the current portfolio?

Answer 24

boston matrix

Question 25

what is the boston matrix?

Answer 25

way of analysing the portfolio it categorises products into four categories which are based on: - market share (low or high) - market growth (potential customers growing/competitors)

Question 26

what are the axis on the boston matrix?

Answer 26

vertical (y) = market growth | horizontal (x) = market share

Question 27

what are the four categories in the boston matrix?

Answer 27

``` LEFT - star - cash cow RIGHT - question mark - dog ```

Question 28

what is meant by the star (BM)?

Answer 28

(top left) high growth products which are compared strongly with competition, need high investment to keep up, should turn into cash cows

Question 29

what is a cash cow BM?

Answer 29

low growth products, need less investment, mature products, continue to generate profit for stars

Question 30

what is the question mark BM?

Answer 30

(top right) products with low market share but in a high growth market, have potential, all about finding investors who then have to ask which ones they would like to choose

Question 31

what is the dog BM?

Answer 31

(bottom right) low market share and low market growth usually make enough cash to break even if rarely often close or sell

Question 32

where would you want your business to be in regards to the boston matrix

Answer 32

any except the dog

Question 33

what are the assumptions that boston matrix based on?

Answer 33

- market share can be gained from investment in marketing - market share gains will always generate cash - best opportunity to build dominant position is during the growth phase

Question 34

what is the extended boston matrix?

Answer 34

Barksdale and Harris what happens if there was a negative growth in the market war horse and dodos war horse - high market share but negative growth, is this just long term or short e.g. recession

Question 35

why is the boston matrix criticised?

Answer 35

- market growth is not always based on market attractiveness - ignores competitor gains - focuses on current position - judgement based - market share not always good at measuring products ability to create cash

Question 36

apart from the boston matrix what other model can be used to analyse business portfolio?

Answer 36

GE Mckinsey matrix

Question 37

what is the GE Mckinsey matrix?

Answer 37

looks at business strengths and industry attractiveness, it is more flexible than the BM as you can decide the: - business strengths as a manager - industry attractiveness will take into account size of competition and size of industry - there are three zones (nine squares)

Question 38

what is on each axis? | GE matrix)

Answer 38

``` y = industry attractiveness x = business strengths ```

Question 39

what are the circles on the GE Matrix mean?

Answer 39

``` size = indicate the size of the market, bigger the circe the bigger the market shading = percentage of the market (market share) the bigger the better ```

Question 40

what are the limitations of GE Mckinsey?

Answer 40

- judging attractiveness and strengths is hard so may decide to grow a business that should have been held if they do not match up - more complex - no future

Question 41

what is a model that looks into the future rather than the past?

Answer 41

Ansoff growth matrix

Question 42

what is the ansoff growth matrix?

Answer 42

marketing planning model that helps a business determine its product and market growth strategy

Question 43

what are on each axis in the ansoff model?

Answer 43

``` vertical = (bottom left) new markets and existing markets (risk increases to new markets) top = existing products and new products (risk increases to new products) ```

Question 44

what are the four categories inside ansoff?

Answer 44

top left - market penetration bottom left - market development top right - product development bottom right - diversification

Question 45

what is market penetration?

Answer 45

growth strategy in which business focuses on selling existing products into existing markets - secure dominance of market - business as usual - loyalty schemes

Question 46

what is market development?

Answer 46

business seeks to sell existing products in a new market - risk increases - geographical market (exports) - distribution channels

Question 47

what is product development?

Answer 47

introduce new product into existing market - R&D devloepment and innovation - detailed insights into customer needs - being first in market

Question 48

what is diversification?

Answer 48

new products new markets - risk - clear idea what it expects to gain

Question 49

what is wrong with growth models?

Answer 49

- not all strategies have to be growth - harvest (liquidate - donwsize

Question 50

what is meant by harvest?

Answer 50

if a market has become unattractive you liquidate the money could then invest elsewhere

Question 51

where are the last two stages in strategic planning looked at?

Answer 51

- planning marketing and other functional strategies - implementation, feedback and control both looked at in marketing plan