Retail Strategic Planning

Ankita Bhardwaj
SRF
Strategic planning
⚫ A systematic process of envisioning a desired future,
and translating this vision into broadly defined goals or
objectives and a sequence of steps to achieve them.

In contrast to long-term planning (which begins with

the current status and lays down a path to meet
estimated future needs), strategic planning begins with
the desired-end and works backward to the current
status
Strategic planning process
Methods for strategic planning
1. The SWOT method- The assessment of the external
and internal environment allows for the identification
of the enterprise strengths and weaknesses,
opportunities and threats existing in the external
environment as well as its competitiveness
2. Competitor analysis-
⚫ Competitor analysis has two primary activities
⚫ obtaining information about important competitors,
⚫ using that information to predict competitor behavior.

⚫ The goal of competitor analysis is to understand:

⚫ with which competitors to compete,
⚫ competitors' strategies and planned actions,
⚫ how competitors might react to a firm's actions,
⚫ how to influence competitor behavior to the firm's own
advantage.
⚫ Michael Porter presented a framework for analyzing
competitors. This framework is based on the following
four key aspects of a competitor
⚫ Competitor's objectives
⚫ Competitor's policies
⚫ Competitor's strategy
⚫ Competitor's capabilities

Objectives and policies are what drive the competitor,

and strategy and capabilities are what the competitor is
doing or is capable of doing
3. The McKinsey 7-S model-. Developed in the early
1980s by Tom Peters and Robert Waterman, two
consultants working at the McKinsey & Company
consulting firm, the basic premise of the model is that
there are seven internal aspects of an organization that
need to be aligned if it is to be successful.
⚫ The 7-S model can be used in a wide variety of
situations where an alignment perspective is useful, for
example, to help :
⚫ Improve the performance of a company.
⚫ Examine the likely effects of future changes within a
company.
⚫ Determine how best to implement a proposed strategy
 ⚫ The McKinsey 7-S model involves seven
interdependent factors which are categorized as either
"hard" or "soft" elements:
⚫ Hard" elements are easier to define or identify and
management can directly influence them: These are
strategy statements; organization charts and reporting
lines; and formal processes and IT systems.
⚫ "Soft" elements, on the other hand, can be more
difficult to describe, and are less tangible and more
influenced by culture. However, these soft elements
are as important as the hard elements if the
organization is going to be successful.
HARD SOFT
Strategy Shared Values
Structure Skills
Systems Style
Staff
⚫ Strategy: the plan devised to maintain and build
competitive advantage over the competition.
⚫ Structure: the way the organization is structured and who
reports to whom.
⚫ Systems: the daily activities and procedures that staff
members engage in to get the job done.
⚫ Shared Values: called "superordinate goals" when the
model was first developed, these are the core values of the
company that are evidenced in the corporate culture and the
general work ethic.
⚫ Style: the style of leadership adopted.
⚫ Staff: the employees and their general capabilities.
⚫ Skills: the actual skills and competencies of the employees
working for the company.
Model
4. The Boston matrix- The matrix is derived from a
simple proposition (a plan) including only two factors
defining what benefits there are from offered market
positions. The first is the rate of growth within a
specific segment, and the second is the relative
occupied market share. (model)
⚫ Stars- Stars represent business units having large market
share in a fast growing industry. They may generate cash
but because of fast growing market, stars require huge
investments to maintain their lead. SBU’s located in this
cell are attractive as they are located in a robust industry
and these business units are highly competitive in the
industry. If successful, a star will become a cash cow when
the industry matures.
⚫ Cash Cows- Cash Cows represents business units having a
large market share in a mature, slow growing industry.
Cash cows require little investment and generate cash that
can be utilized for investment in other business units. These
SBU’s are the corporation’s key source of cash, and are
specifically the core business. They are the base of an
organization. When cash cows loose their appeal and move
towards deterioration, then a retrenchment policy may be
pursued.
⚫ Question Marks- Question marks represent business units
having low relative market share and located in a high growth
industry. They require huge amount of cash to maintain or gain
market share. They require attention to determine if the venture
can be viable. Question marks are generally new goods and
services which have a good commercial prospective.. Most
businesses start as question marks as the company tries to enter a
high growth market in which there is already a market-share. If
ignored, then question marks may become dogs, while if huge
investment is made, then they have potential of becoming stars.
⚫ Dogs- Dogs represent businesses having weak market shares in
low-growth markets. They neither generate cash nor require
huge amount of cash. Due to low market share, these business
units face cost disadvantages.. These business firms have weak
market share because of high costs, poor quality, ineffective
marketing, etc. Unless a dog has some other strategic aim, it
should be liquidated if there is fewer prospects for it to gain
market share. Number of dogs should be avoided and minimized
in an organization.
5. M. Porter’s 5 forces model- M. Porter believes that
the stronger each of these forces is, the more limited
the possibility for the industry enterprise to raise the
prices and to gain higher profits (model)
6. Ansoff’s matrix
⚫ There are many situations during different periods of
the life cycle of an organisation when it is necessary to
take decisions concerning further development of the
organisation, for example, to expand the business, to
change the business industry, to change the market
segment, to develop internationally, to develop its own
brand, etc
⚫ Ansoff’s matrix provides the possibility to evaluate the
options and to choose the most appropriate strategic
decision for the specific situation, which would
provide the highest return on any potential investments
planned.
⚫ Penetration of the market
The marketers try to sell more of the same product/service
to the customers. Therefore, the optional activities are:
• Advertising - motivate more people in the existing market to
choose your
product or to use it more
• Introduce loyalty schemes
• Introduce the price discount or other special schemes;
• Expand the sales department or increase the number of sales
agents;
• Buy a competitor, establish a joint venture with it.
⚫ Product development
⚫ With this approach you are selling more items to the
same people. Therefore, the optional activities are:
⚫ Extend the applicability of the product by manufacturing
it in various modifications or by packing, grouping the
product differently;
⚫ Developing related products or services (for example, a
furniture manufacturing and assembling enterprise also
launches production and assembly of doors
correspondent by design to the specific orders, as it is
highly likely that the customers introducing new design
for furniture in their guest-room would find the old
doors, their material, fixtures and fittings, colour
inconsistent with the new furniture design);
⚫ In the service sector the time for marketing, the level of
customer service or the quality should be expanded
⚫ Market development
⚫ With this approach new markets or new market
segments are sought. Effort is made to sell more of the
same goods to new clients. Therefore, the optional
activities are:
⚫ Enter into new geographic regions in the local markets or
abroad Use other distribution channels, for example, the
internet, direct sales, in case the present sales takes place
in the traditional manner;
⚫ Sell to other groups of people, other age ranges, sex or
demographic profiles differing from your regular clients
⚫ Diversification
⚫ This is a risky strategy. Usually the experience
accumulated before does not help, there are no
advantages due to volume as the effort here is to sell a
totally different product/service to new and different
clients.
⚫ The main advantage of this strategy is that the overall
organisational risk decreases along with the reducing
exposure of the organisation to a particular market
industry, which may have a negative or slow growth
over a longer period of time leading inevitably to a
higher competition
7. Benchmarking- Benchmarking/comparison is defined
as ‘a permanent, systematic process of comparing
organisations, functions or business sectors to the
world’s bests in order to build new standards and/or
improve the existing processes.
⚫ There are four basic types of benchmarking:
⚫ Internal – benchmarking within an organisation, i.e.,
among the structural units;
⚫ Competitiveness – benchmarking activities and
achievements with direct competitors;
⚫ Functional – benchmarking of similar processes within
the scope of a wide range of industries;
⚫ General – comparison of performance among unrelated
industries
Strategy levels
Corporate level strategy
⚫ Top management’s overall plan for the entire
organization and its strategic business units.
⚫ Corporate level strategy occupies the heights level of
DECISION MAKING.
⚫ The nature of the decisions tends to be value oriented,
conceptual than the Business level, and Operational or
Functional level
⚫ Growth: expansion into new products and markets. ◦
Stability: maintenance of the status of the organization.
◦ Renewal: redirection of the firm into new markets.
⚫ Growth Strategy ◦ Seeking to increase the
organization’s business by expansion into new
products and markets.

⚫ Types of Growth Strategies

⚫ Concentration
⚫ Vertical integration
⚫ Horizontal integration
⚫ Diversification
⚫ Concentration: Focusing on a primary line of business and
increasing the number of products offered or markets
served.
⚫ Vertical Integration:
1). Backward vertical integration.
2). Forward vertical integration.
⚫ Horizontal Integration: Combining operations with another
competitor in the same industry to increase competitive
strengths.
⚫ Diversification:
1). Related Diversification: Expanding by merging with firms in
different, but related industries.
2). Unrelated Diversification: Growing by merging with firms
in unrelated industries where higher financial returns are
possible.
⚫ Stability Strategy: A strategy that seeks to maintain
the status with the uncertainty of the environment,
when the industry is experiencing slow- or no-growth
conditions.
⚫ Renewal Strategy: Developing strategies to counter
organization weaknesses that are leading to
performance declines.
Business level strategy
⚫ A strategy that seeks to determine how an organization
should compete in each of its SBUs (strategic business
units).
⚫ Cost leadership: Attaining, then using the lowest total
cost basis as a competitive advantage.
⚫ Differentiation: Using product features or services to
distinguish the firm’s offerings from its competitors.
⚫ Market focus: Concentrating competitively on a specific
market segment.
Functional level strategy
⚫ Focus is on improving the effectiveness of operations
within a company.
⚫ Which is done by: ◦ Manufacturing ◦ Marketing ◦
Materials management ◦ Research and development ◦
Human resources