Professional Documents
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Developing A Strategic Business Plan
Developing A Strategic Business Plan
Strategic Planning
is the managerial process of developing and maintaining a strategic fit between the organization's objectives and resources and its changing market opportunities.
Org Objectives
Resources
Operating Plans
Know your enemy, know yourself, and your victory will not be threatened. Know the terrain, know the weather, and your victory will be complete.
Strategic Marketing
Marketing Strategy is a series of integrated actions leading to a sustainable competitive advantage. John Scully
Corporate Mission
Broad purposes of the organization General criteria for assessing the long-term organizational effectiveness Driven by heritage & environment Mission statements are increasingly being developed at the SBU level as well
Corporate Culture
The most abstract level of managerial thinking How do you define culture? What is the significance of culture to an organization? How does marketing affect culture in the organization?
Strategic planning
Goals / Objectives
SWOT Analysis
Strategy
Implementation
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Competitive assessment
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Strategic initiatives
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Internal assessment
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How does your current
business emphasis fit with industry opportunity and competitive + landscape?
Risk/contingencies & strategic alternatives
Financial projections
Mission Objectives
Strategies Tactics Plans
Mission
Tactics Plans
Objectives
Strategies
Tactics
Plans
Objectives
Strategies
Tactics
Plans
Business Plan
To succeed in the long term, our business needs a vision of how we will change and improve in the future. without a vision, the people perish
VISION
Consistently followed and measured Provides future direction
Is motivating
Is realistic
Values provide the justification of behaviour and, therefore, exert significant influence on marketing decisions. BT's activities are underpinned by a set of values that all BT people are asked to respect:
We put customers first
We are professional
We respect each other We work as one team We are committed to continuous improvement.
These are supported by our vision of a communications-rich world - a world in which everyone can benefit from the power of communication skills and technology.
A society in which individuals, organisations and communities have unlimited access to one another and to a world of knowledge, via a multiplicity of communications technologies including voice, data, mobile, internet - regardless of nationality, culture, class or education.
Our job is to facilitate effective communication, irrespective of geography, distance, time or complexity.
Source: BT Group plc website
The Business Mission is important to our sales & marketing planning It provides an outline of how the marketing plan should seek to fulfil the mission It provides a means of evaluating and screening the marketing plan; are marketing decisions consistent with the mission? It provides an incentive to implement the marketing plan
"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".
Strategic Audit
- ensuring that the Company resources and competencies are understood and evaluated
Resource Audit
Performance Analysis
Portfolio Analysis
Human Existing Staff Future Staff Requirements Training & Development Intangible Goodwill Reputation Brands Intellectual Property
Corporate
These are objectives that concern the business or organisation as a whole
We aim for a return on investment of at least 15% We aim to achieve an operating profit of over $10 million on sales of at least $100 million We aim to increase earnings per share by at least 10% every year for the foreseeable future
Functional
Specific objectives for sales & marketing activities
We aim to build customer database of at least 250,000 households within the next 12 months We aim to achieve a market share of 10% We aim to achieve 75% customer awareness of our brand in our target markets We aim to sell $2m of xyz product into ABC market over the next 6 months
Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Michael Porter suggested that the activities of a business could be grouped under two headings:
1. 2. Primary Activities - those that are directly concerned with creating and delivering a product (e.g. component assembly); and Support Activities, which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake all primary and support activities.
Value Chain Analysis is one way of identifying which activities are best undertaken by our business and which are best provided by others ("outsourced"). Linking Value Chain Analysis to Competitive Advantage What activities a business undertakes is directly linked to achieving competitive advantage. For example, if we wish to outperform our competitors through differentiating ourselves through higher quality then we will have to perform our value chain activities better than the opposition. But if we adopt a strategy based on seeking cost leadership this will require a reduction in the costs associated with the value chain activities, or a reduction in the total amount of resources used.
Primary Activities
Primary value chain activities include:
Primary Activity
Inbound logistics
Description
All those activities concerned with receiving and storing externally sourced materials
Operations
The manufacture of products and services - the way in which resource inputs (e.g. materials) are converted to outputs (e.g. products) All those activities associated with getting finished goods and services to buyers
Essentially an information activity - informing buyers and consumers about products and services (benefits, use, price etc.) All those activities associated with maintaining product performance after the product has been sold
Support Activities
Support activities include:
Secondary Activity
Procurement
Description
This concerns how resources are acquired for a business (e.g. sourcing and negotiating with materials suppliers) Those activities concerned with recruiting, developing, motivating and rewarding the workforce of a business Activities concerned with managing information processing and the development and protection of "knowledge" in a business
Infrastructure
Concerned with a wide range of support systems and functions such as finance, planning, quality control and general senior management
Assess the potential for adding value via cost advantage or differentiation, or identify current activities where a business appears to be at a competitive disadvantage;
Determine strategies built around focusing on activities where competitive advantage can be sustained
Core competencies
Core competencies are those capabilities that are critical to a business achieving competitive advantage.
The starting point for analysing core competencies is recognising that competition between businesses is as much a race for competence mastery as it is for market position and market power.
Senior management cannot focus on all activities of a business and the competencies required to undertake them. So the goal is for management to focus attention on competencies that really affect competitive advantage. Core Competencies are not seen as being fixed. Core Competencies should change in response to changes in the company's environment. They are flexible and evolve over time. As a business evolves and adapts to new circumstances and opportunities, so its Core Competencies will have to adapt and change. We need to understand what we are good and what makes us better and to hone these advantages and to develop new ones to underpin the business strategy
What does the Core Competence Achieve? Provides potential access to a wide variety of markets Makes a significant contribution to the perceived customer benefits of the end product Difficult for competitors to imitate
Comments
The key core competencies are those that enable the creation of new products and services.
Core competencies are the skills that enable a business to deliver a fundamental customer benefit - in other words: what is it that causes customers to choose one product over another? To identify core competencies in a particular market, ask questions such as "why is the customer willing to pay more or less for one product or service than another?" "What is a customer actually paying for? A core competence should be "competitively unique": In many industries, most skills can be considered a prerequisite for participation and do not provide any significant competitor differentiation. To qualify as "core", a competence should be something that other competitors wish they had within their own business.
Competitive advantage is a companys ability to perform in one or more ways that competitors cannot or will not match.
Philip Kotler
Broad Target
Cost Leadership
Differentiation
Scope
Narrow Target
Cost Focus
Differentiation Focus
Substantiality
Is it substantial enough to make a difference?
Sustainability
Can it be neutralized by competitors quickly?
Ability to be leveraged into visible business attributes that will influence customers
Positions of advantage
Superior customer value Lower relative total cost
Performance advantages
Customer satisfaction, Loyalty, Market Share, Profit
Sources of advantages
Superior skills & knowledge, Superior resources, Superior business process
WHERE TO COMPETE?
Target customers and segments
Which customers are you trying to target or attract? Which are you willing to serve, but will not spend resources to attract? Which would you prefer not to serve?
Customers
Products
Patent
Innovation Distinctive competencies Cross-functional coordination Market positioning Cost/efficiency management Talent development
Distinctive competencies
Step 2: Assess your overall position relative to the capabilities required to succeed in the industry. Also, determine if these capabilities are relevant to the segments you serve
Step 3: Compare the strengths and weaknesses of your competitive position vs. the necessary skills
Supplier Power
Competitive Rivalry
Buyer Power
Porter 5 Forces
New Entrants
Rivalry Determinants Industry Growth Fixed Costs Product Differences Brand Identity Exit Barriers
Suppliers
Substitutes
2. New entrants
5. Industry competitors
3. Buyers
3. Determinants of buying power Bargaining leverage Buyer concentration vs. firm concentration Buyer volume Buyer switching costs relative to firm switching costs Buyer information Ability to backward integrate Substitute products Pull-through Price sensitivity Price/total purchases Product differences Brand Identity Impact on quality perception Buyer profits Decision makers' incentives
4. Substitutes
4. Determinants of substitution threat Relative price performance of substitutes Switching costs Buyer propensity to substitute
Product Level
Product lines
Product config Product items
Short term
Medium term
Long term
Timing Level
Businesses that succeed do so by creating and keeping customers. They do this by providing better value for the customer than the competition. Marketing management constantly have to assess which customers they are trying to reach and how they can design products and services that provide better value (competitive advantage). The main problem with this process is that the environment in which businesses operate is constantly changing. So a business must adapt to reflect changes in the environment and make decisions about how to change the marketing mix in order to succeed.
Strategic Plan
Business Plan
Marketing Plan
Sales Plan
State Plan
Regional Plan
Industry Plan
The objective of a strategic plan is to set the direction of a business and create its shape so that the products and services it provides meet the overall business objectives. Marketing has a key role to play in strategic planning, because it is the job of marketing management to understand and manage the links between the business and the environment. Sometimes this is quite a straightforward task.
For example, in many small businesses there is only one geographical market and a limited number of products (perhaps only one product!). However, consider the challenge faced by marketing management in a multinational business, with hundreds of business units located around the globe, producing a wide range of products. Keeping control of marketing decision-making in such a complex situation calls for well-organised marketing planning.
The following questions are key in the marketing and strategic planning process:
Where are we now? How did we get there? Where are we heading? Where would we like to be? How do we get there? Are we on course?
Situation Analysis
Identify & prioritize major problems and opportunities: selection of key issues
SWOT
Internal Environment Strengths World class product Financial resources Know-how Weaknesses Technical support Internal processes Channels network External Environment Opportunities Water & Energy crises Environment awareness Productivity improvement Threats Competitors market share Euro X Dollar Technology development
SWOT ANALYSIS
Opportunities/Threats How are demand and supply expected to evolve? How do you expect the industry chain economics to evolve? What are the potential major industry discontinuities? What competitor actions do you expect? NEUTRALIZE THREATS
BUILD ON STRENGTHS Strengths/ Weaknesses What are your BUs assets/competencies that solidify your competitive position? What are your BUs assets/competencies that weaken your competitive position? Can be used as a thought starter for competitive analysis and internal assessment
YOUR BUSINESS
CONVERT OPPORTUNITIES
ADDRESS WEAKNESSES
TOWS matrix
Strengths Opportunities S-O strategies Weaknesses W-O strategies
Threats
S-T strategies
W-T strategies
S-O strategies pursue opportunities that are a good fit to the companies strengths. W-O strategies overcome weaknesses to pursue opportunities. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats. W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats.
PEST analysis
A scan of the external macroenvironment in which the company wants to operate (or operates) and can be expressed in terms of the following factors:
Political Economic Social Technological
ECONOMIC
home economy situation home economy trends overseas economies and trends general taxation issues taxation specific to product/services seasonality/weather issues market and trade cycles specific industry factors market routes and distribution trends customer/end-user drivers interest and exchange rates international trade/monetary issues
SOCIAL
lifestyle trends demographics consumer attitudes and opinions media views law changes affecting social factors brand, company, technology image consumer buying patterns fashion and role models major events and influences buying access and trends ethnic/religious factors advertising and publicity ethical issues
TECHNOLOGICAL
competing technology development research funding associated/dependent technologies replacement technology/solutions maturity of technology manufacturing maturity and capacity information and communications consumer buying mechanisms/technology technology legislation innovation potential technology access, licencing, patents intellectual property issues global communications
PEST or SWOT
A PEST analysis most commonly measures a market; a SWOT analysis measures a business unit, a proposition or idea. Generally speaking a SWOT analysis measures a business unit or proposition, whereas a PEST analysis measures the market potential and situation, particularly indicating growth or decline, and thereby market attractiveness, business potential, and suitability of access - market potential and 'fit' in other words. PEST analysis uses four perspectives, which give a logical structure, in this case organized by the PEST format, that helps understanding, presentation, discussion and decisionmaking. PEST analysis can be used for marketing and business development assessment and decision-making, and the PEST template encourages proactive thinking, rather than relying on habitual or instinctive reactions.
tructure
onduct
erformance
Feedback
Technology Changes in
breakthroughs government policy/regulations Domestic International
Economics of demand Availability of substitutes Differentiability of products Rate of growth Volatility/cyclicality Economics of supply Concentration of producers Import competition Diversity of producers Fixed/variable cost structure Capacity utilization Entry/exit barriers Industry chain economics Bargaining power of input suppliers Bargaining power of customers
Marketing Pricing Volume Advertising/promotion New products/R&D Distribution Capacity change Expansion/contraction Entry/exit Acquisition/merger/ divestiture Vertical integration Forward/backward integration Vertical joint ventures Long-term contracts Internal efficiency Cost control Logistics Process R&D Organization effectiveness
Definition of risks
Definition Business risk
Regulatory risk
Technology risk
Risk due to major changes in technology Risk of failures due to business processes and
operations or peoples behavior, either intentional (e.g. fraud) or unintentional (e.g. errors)
Integrity risk
Macroeconomic risk
Management
Personal Mastery:
Aspiration involves formulating a coherent picture of the results people most desire to gain as individuals, alongside a realistic assessment of the current state of their lives today. Learning to cultivate the tension between vision and reality can expand people's capacity to make better choices, and to achieve more of the results that they have chosen.
Mental Models:
Reflection and inquiry skills is focused around developing awareness of the attitudes and perceptions that influence thought and interaction. By continually reflecting upon, talking about, and reconsidering these internal pictures of the world, people can gain more capability in governing their actions and decisions.
Shared Vision:
Establishes a focus on mutual purpose. People learn to nourish a sense of commitment in a group or organization by developing shared images of the future they seek to create, and the principles and guiding practices by which they hope to get there.
Team Learning:
Group interaction. Through techniques like dialogue and skillful discussion, teams transform their collective thinking, learning to mobilize their energies and actions to achieve common goals, and drawing forth an intelligence and ability greater than the sum of individual members' talents.
Systems Thinking:
People learn to better understand interdependency and change, and thereby to deal more effectively with the forces that shape the consequences of our actions. Systems thinking is based upon a growing body of theory about the behavior of feedback and complexity - the innate tendencies of a system that lead to growth or stability over time. To help people see how to change systems more effectively and how to act more in tune with the larger processes of the natural and economic world.
>Involve mid-level management as active participants >Think it through - decide how to manage implementation
>Charge mid-level management with >Make no attempt to link with day-to-day aligning lower-level plans operations >Make careful choices about the contents of the plan and form it will take >Not being thorough-glossing over the details
Failure
No accountability Never talk about the plan
Failure
No accountability Disengagement from process Unmanaged activity
Phase integration of implementation actions with workload Involve everyone within the organization
Failure
Focus only on short term need for resources Ignore or avoid change
Manage the change process No measurement system Evaluate results Share lessons learned; acknowledge successes through open and frequent communication Hide mistakes/lay blame; limited/no communication
Failure
No accountability
Incorporate new leaders into the strategic planning process Integrate measurement with strategic planning Use experienced strategic planning facilitators Don't use measurement information Shortcut the process
Best Companies Spend more time on Forward Planning than Historical Analysis
Achieving Agility Through a New Approach to Forecasting In todays turbulent economy, rolling forecasts are proving to be an important new tool in changing the way budgeting and planning has traditionally been handled. Mary Brandel