Strategy Mgt.ppt

8/8/2019 Strategy Mgt.ppt

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STRATEGIC PLANNING

PREPARED BY:-ARPIT SURANA

ASHWIN KUMARBHAVNA TALREJA


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Define strategic planning:

Strategic planning can be defined as the process of determining the basic long term objectives of anenterprise and the adoption of courses of actionand allocation of resources necessary to achievethese objectives.


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Strategic Marketing ProcessProcess whereby an organizationallocates it marketing mix resources

to reach its target markets.

Planning

Implementation Evaluation


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CORPORATE AND DIVISION

STRATEGIC PLANNINGCO RP O RATES UNDERTAKE 4 PLANNING

AC TIVITIES

A. Defining corporate missionB. Establishing Strategic Business Units

(SBU)C . Assigning resource to each SBUD. Planning new business and downsizing

older business


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A) Defining corporate mission:

Defining corporate mission helps to create asense of direction and opportunity for theorganization.

Good corporate mission statements focus onfive characteristics:Limited number of goals/objectivesHonor corporate policies and values

Define major competitive scopes in its selectedmarket( e.g. industry , product & application,competence, market segment, vertical,geographical scopes)


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They take long term view.

It is short and meaningful


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B) Establishing SBU

i) SBU must be planned separately from therest of the companyii) SBU has its own set of competitorsiii) SBU has a manager who is responsible forstrategic planning


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D) Planning new business anddownsizing older business :

Every company has plans for growth. When desiredsales targets are not met, strategic planning needs tobe re-examined. Growth is possible in three ways:-

1. Intensive Growth :Growth within the companys current Business.Market Penetration Strategy, (for current market,current product)Product Development Strategy, (new product for

current marketMarket Development Strategy, ( for new market,current product)


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2. Integrative growth:

Growth opportunities in the businesses that arerelated to the companys current businesses.

Backward integration - Acquiring one or moresuppliers to gain controlForward integration - Acquiring one or morewhole sellers if they are more profitable

Horizontal integration - Acquiring one ormore competitors


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3 .Diversification growth :

O pportunities in the businesses that areunrelated to the companys current businesses.Concentric diversification -Developing newproduct that has technological and marketingsynergies with current product.Horizontal diversification -Developing newproduct that might appeal current customers

but not related with current business.


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Business unit strategic planning:

1.Define business mission: Particular missiondefined by a business unit within the broadercorporate mission.

2 .Goal formulation:The four criteria obj ectives must meet f or aneffective MBO system:Obj ectives must b e a rr anged hie r a r chically

Obj ectives must b e stated quantitatively Obj ectives sh o uld b e r ealistic Obj ectives sh o uld b e c o nsistent


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3.Strategic formulation

These a r e specific means t o achieve obj ectivesTh r ee types o f st r ategies:O verall C ost Leadership

DifferentiationFocus

4 .Programme formulationE ach p ro g r am sh ould b e analyzed b y the activity Based c o st acc o unting t o find out whethe r it will

p ro duce sufficient r esult and o ffset the c o sts


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5.Implementation

C a rr ying o ut the p ro g r ams t o achieve theexpected obj ectives

6. Feedback & controlThe p ro cess o f t r acking the r esults, m o nit or ingdevel o pments in the envi ro nments, and takingc orr ective acti o ns when faced with ma jor changes in the ma r ketplace


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BOSTON C ONSULTING GROUP MATRIX

BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970s.

According to this technique, businesses or

products are classified as low or high performersdepending upon their market growth rate and relative market share.


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R elative M arket Sh are

and M

arket G

rowt h

To understand the B oston M atrix you need to understand how marketshare and market growth interrelate.


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MARKET SHARE

Ma r ket sha r e is the percentage of the total marketthat is being serviced by your company, measuredeither in revenue terms or unit volume terms.

RELATIVE MARKET SHARE

RMS = Business unit sales this yearLeading rival sales this year

The higher your market share, the higher proportionof the market you control.


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MARKET GROWTH RATE

Ma r ket g ro wth is used as a measure of amarkets attractiveness.

MGR = Individual sales - individual salesthis year last yearIndividual sales last year

Markets experiencing high growth are oneswhere the total market share available isexpanding, and theres plenty of opportunity for everyone to make money.


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THE B C G GROWTH-SHARE MATRIX

It is a p ortfolio p lanning model which is based onthe observation that a companys business units canbe classified in to four categories:

S tarsQuestion marksCas h cowsDogs

It is based on the combination of market growth andmarket share relative to the next best com p etitor .


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STARS H

igh g ro wth,H

igh ma r ket sha r eStars are leaders in business.They also require heavy investment,

to maintain its large market share.It leads to large amount of cashconsumption and cash generation.Attempts should be made to hold themarket share otherwise the star willbecome a C ASH CO W.


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Cas h Cows

Low growth , High market shareThey are foundation of the companyand often the stars of yesterday.

They generate more cash thanrequired.They extract the profits by investingas little cash as possibleThey are located in an industry that ismature, not growing or declining.


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D OGS L

ow g ro wth,L

ow ma r ket sha r eDogs are the cash traps.Dogs do not have potential to bring in

much cash.Number of dogs in the companyshould be minimized.Business is situated at a decliningstage.


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Q UESTION MARKS H

igh g ro wth ,L

ow ma r ket sha r eMost businesses start of as question marks.They will absorb great amounts of cash if the market share remains unchanged,(low).Why question marks?Question marks have potential to becomestar and eventually cash cow but can also

become a dog.Investments should be high for questionmarks.


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BENEFITS

BC G MATRIX is simple and easy tounderstand.It helps you to quickly and simply screenthe opportunities open to you, and helpsyou think about how you can make themost of them.It is used to identify how corporate cashresources can best be used to maximize acompanys future growth and profitability.


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LIMITATIONS

BC G MATRIX uses only twodimensions, Relative market shareand market growth rate.Problems of getting data on marketshare and market growth.High market share does not mean

profits all the time.Business with low market share canbe profitable too.


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C ON

C LUSION

Though BCG MATRIX has itslimitations it is one of the mostFAMOUS AND SIMPLE portfolioplanning matrix ,used by largecompanies having multi-products.

Strategy Mgt.ppt

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