Chapter 2: Strategic Planning for Competitive Advantage

Chapter 2: Strategic Planning for Competitive Advantage
Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization. Prepared by David Ferrell, B-books, Ltd. Designed by Eric Brengle, B-books, Ltd. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Chapter 2 Strategic Planning for Competitive Advantage
Learning Outcomes Understand the importance of strategic marketing and know a basic outline for a marketing plan Develop an appropriate business mission statement Describe the components of a situation analysis LO1 LO2 LO3 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Learning Outcomes Explain the criteria for stating good marketing objectives Identify sources of competitive advantage Identify strategic alternatives Discuss target market strategies LO4 LO5 LO6 LO7 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Learning Outcomes Describe the elements of the marketing mix Explain why implementation, evaluation, and control of the marketing plan are necessary Identify several techniques that help make strategic planning effective LO8 LO9 LO10 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

The Nature of Strategic Planning
Chapter 2 Strategic Planning for Competitive Advantage The Nature of Strategic Planning Understand the importance of strategic marketing and know a basic outline for a marketing plan. LO1 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

The managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities. The goal is long-term profitability and growth. Notes: Strategic planning creates and maintains a fit between the organization’s resources and objectives and the evolving market opportunities. The goal is to sustain and increase long-run profitability and growth. Strategic decisions require long-term commitments of resources. Strategic errors can threaten a firm’s survival, but a good plan can help protect and grow the firm. Examples of strategic decisions: * General Electric shifts its focus to being an environmentally conscious company with its “Ecomagination” effort * Toys “R” Us expands its baby line, Babies “R” Us, in response to weak toy sales * McDonald’s decision to offer more healthful foods * S.C. Johnson’s introduction of Shout Color Catchers Discussion/Team Activity: Discuss strategic planning decisions of other companies. Discuss why strategic planning is important for these companies. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Strategic Marketing Management
Chapter 2 Strategic Planning for Competitive Advantage Strategic Marketing Management What is the organization’s main activity? How will it reach its goals? Notes: How do companies go about strategic marketing planning? How do employees know how to implement the long-term goals of the firm? The answer is a marketing plan. THE ANSWER IS A MARKETING PLAN. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Marketing Planning Marketing Plan- A written document that acts as a guidebook for the marketing manager. Notes: Marketing planning involves the design of activities related to marketing objectives and the changing marketing environment. Marketing planning is the basis for all marketing strategies and decisions. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Why Write a Marketing Plan?
Chapter 2 Strategic Planning for Competitive Advantage Why Write a Marketing Plan? Provides a basis for comparison of actual and expected performance Provides clearly stated activities to work toward common goals Serves as a reference for the success of future activities Provides an examination of the marketing environment Allows entry into the marketplace with awareness LOI Notes: Writing a marketing plan allows the examination of the marketing environment in conjunction with the inner workings of the businesses. Once written it serves as a reference point for future activities, and allows the marketing manager to enter the marketplace with an awareness of problems and opportunities. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Marketing Plan Elements
Chapter 2 Strategic Planning for Competitive Advantage Marketing Plan Elements Business Mission Statement Situation or SWOT Analysis Objectives Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Notes: Some elements are common to all marketing plans. These include the business mission and objectives, performing a SWOT analysis, determining a target market, and establishing a marketing mix. Other elements that may be included are budgets, implementation timetables, required marketing research efforts, or elements of advanced strategic planning. Exhibit 2.1: Elements of a marketing plan The Marketing Plan Appendix contains a Marketing Plan Outline. Promotion Price Implementation Evaluation Control Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome The Importance of Strategic Marketing
Chapter 2 Strategic Planning for Competitive Advantage Review Learning Outcome The Importance of Strategic Marketing LO1 What Why How Strategic Planning Long term profitability and growth Write a marketing plan Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Defining the Business Mission
Chapter 2 Strategic Planning for Competitive Advantage Defining the Business Mission Develop an appropriate business mission statement. LO2 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Defining the Business Mission
Chapter 2 Strategic Planning for Competitive Advantage Defining the Business Mission Answers the question, “What business are we in?” Focuses on the market(s) rather than the good or service Strategic Business Units (SBUs) may also have a mission statement Notes: The foundation of any marketing plan is the firm’s mission statement. The mission statement is based on an analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions. The mission statement establishes boundaries for all subsequent decisions, objectives, and strategies. Discussion/Team Activity: Find the mission statements for various organizations. Compare the mission statements with the markets served and the products sold by these organizations. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Southwest Airlines Mission Statement
Chapter 2 Strategic Planning for Competitive Advantage Southwest Airlines Mission Statement Notes: The Southwest Airlines mission statement is shown here and in Exhibit 2.2. Source: Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Strategic Business Units (SBUs)
Chapter 2 Strategic Planning for Competitive Advantage Strategic Business Units (SBUs) Characteristics: An SBU HAS… A distinct mission and specific target market Control over its resources Its own competitors Plans independent of other SBUs Notes: An organization may need to define a mission statement and objectives for a Strategic Business Unit (SBU), which is a subgroup of a single business or a collection of related businesses within the larger organization. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Business Mission Statement
Chapter 2 Strategic Planning for Competitive Advantage Review Learning Outcome Business Mission Statement LO2 marketing myopia no direction focus on markets served and benefits customers seek Q: What business are we in? A: Business mission statement Too narrow Too broad Just right marketing myopia no direction focus on markets served and benefits customers seek Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Conducting a Situation Analysis
Chapter 2 Strategic Planning for Competitive Advantage Conducting a Situation Analysis Describe the components of a situation analysis. LO3 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Conducting a Situation Analysis
Chapter 2 Strategic Planning for Competitive Advantage Conducting a Situation Analysis SWOT Analysis- Identifying internal strengths and weaknesses and also examining external opportunities and threats. LO3 Notes: When examining internal strengths and weaknesses, the marketing manager should focus on organizational resources such as production costs, marketing skills, financial resources, company or brand image, employee capabilities, and available technology. When examining external opportunities and threats, marketing managers must analyze aspects of the marketing environment. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

SWOT Analysis ©South-Western College Publishing S W O T Things the company does well. Things the company does not do well. Conditions in the external environment that favor strengths. Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness. Internal External Notes: Performance of a situation (SWOT) analysis helps firms identify their competitive advantage. Strengths and Weaknesses are an internal assessment. Opportunities and Threats are an external environment assessment. Discussion/Team Activity: Perform a SWOT analysis for companies within the same industry. How could you use this information if you worked for a particular company or for a competitive company? Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Environmental Scanning
Chapter 2 Strategic Planning for Competitive Advantage Environmental Scanning Environmental Scanning- The collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan. Notes: Environmental scanning helps identify market opportunities and threats and provides guidelines for the design of marketing strategy. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Components of a Situation Analysis
Chapter 2 Strategic Planning for Competitive Advantage Review Learning Outcome Components of a Situation Analysis LO3 Notes: Additional strengths include superiority in manufacturing, service, quality and value perception, as well as employee capabilities. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Setting Marketing Plan Objectives
Chapter 2 Strategic Planning for Competitive Advantage Setting Marketing Plan Objectives Explain the criteria for stating good marketing objectives. LO4 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Marketing Objectives Realistic Measurable Time specific Compared to a benchmark “Our objective is to increase sales of Purina brand cat food by 15 percent over 2009 sales of $300 million.” Notes: Objectives must also be consistent with and indicate the priorities of the organization Objectives should flow from the business mission statement to the rest of the marketing plan Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Criteria for Good Marketing Objectives
Chapter 2 Strategic Planning for Competitive Advantage Review Learning Outcome Criteria for Good Marketing Objectives LO4 Realistic, measurable, and time-specific objectives consistent with the firm’s objectives: 1. Communicate marketing management philosophy 2. Provide management direction 3. Motivate employees 4. Force executives to think clearly 5. Allow for better evaluation of results Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage Competitive Advantage Identify sources of competitive advantage. LO5 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Chapter 2 Strategic Planning for Competitive Advantage Competitive Advantage Competitive Advantage- The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Chapter 2 Strategic Planning for Competitive Advantage Competitive Advantage Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage Notes: A firm’s competitive advantage is the reason or reasons that cause customers to patronize that firm and not the competition. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Cost Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage Cost Competitive Advantage Cost Competitive Advantage- Being the low-cost competitor in an industry while maintaining satisfactory profit margins. Notes: A cost competitive advantage enables a firm to deliver superior customer value Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Cost Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage Cost Competitive Advantage Obtain inexpensive raw materials Create efficient plant operations Design products for ease of manufacture Control overhead costs Avoid marginal customers Notes: Having a cost competitive advantage means being the low-cost competitor in an industry while maintaining satisfactory profit margins. This enables a firm to deliver superior customer value. Cost leadership can result from the reasons listed on this slide. Cost competitive advantages are subject to continual erosion. Discussion/Team Activity: Identify firms that have a cost competitive advantage and describe how they deliver superior value. Examples: DuPont Dell Computers Wal-Mart Corporation Southwest Airlines Nike General Electric Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Sources of Cost Reduction
Chapter 2 Strategic Planning for Competitive Advantage Sources of Cost Reduction Experience Curves Efficient Labor No-frills Goods and Services Government Subsidies Product Design Reengineering Production Innovations New Service Delivery Methods Notes: Sources of Cost Reduction: Experience Curves: Costs decline as experience with a product increases, and encompasses marketing, manufacturing, and administration costs. Efficient Labor: Labor costs in low-skill, labor-intensive industries can be reduced by going offshore or by outsourcing. No-frills Goods and Services: Removing frills and options can reduce costs. Government subsidies: Governments may provide grants and interest-free loans for target industries. Product design: Cutting-edge design and reverse engineering can offset costs. Reengineering: Reengineering in the form of pruning product lines, closing obsolete factories, or renegotiating supplier contracts can make firms more efficient. Product innovations: New technology and simplified production techniques can reduce production costs. New methods of service delivery: Examples include: * Outpatient surgery and walk-in clinics in the medical industry * Internet ticket booking and self-check-in kiosks in the airline industry Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Product/Service Differentiation
Chapter 2 Strategic Planning for Competitive Advantage Product/Service Differentiation The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Examples of Product/Service Differentiation
Chapter 2 Strategic Planning for Competitive Advantage Examples of Product/Service Differentiation Brand names Strong dealer network Product reliability Image Service Notes: Product/Service Differentiation tends to provide a longer lasting competitive advantage than does cost competitive advantage. As a result, this strategy is more attractive to many top managers. Discussion/Team Activity: Discuss companies that have a product/service differentiation for: Brand name: Lexus Strong dealer network: Caterpillar Tractor Product reliability: Maytag Image: Neiman Marcus Service: FedEx Innovation: Nike PetSmart Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Niche Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage Niche Competitive Advantage Niche Competitive Advantage- The advantage when a firm seek to get and effectively serve a single segment of the market. Notes: A niche competitive advantage targets and serves a single segment. This allows small companies with limited resources to market against giant competitors. An example of a successful niche marketer is The Orvis Company, a specialist in fly fishing manufacturing and sales. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Niche Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage Niche Competitive Advantage Used by small companies with limited resources May be used in a limited geographic market Product line may be focused on a specific product category Discussion/Team Activity: Discuss how a small firm serving a particular niche market can successfully compete against larger, global firms with greater resources. (For example, how might a small bookstore owner compete with Barnes & Noble and Amazon.com?) Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Sources of Sustainable Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage Sources of Sustainable Competitive Advantage Patents Copyrights Locations Equipment Technology Customer Service Promotion Skills and Assets of an Organization Notes: A sustainable competitive advantage lasts only as long as the time it takes a competitor to imitate the strategy and plans. Marketing managers should continually look for skills and assets that create and sustain competitive advantage. A sustainable competitive advantage is a function of the speed with which competitors can imitate a company’s strategy and plans. Imitation requires a competitor to identify the leader’s competitive advantage, determine how it is achieved, and learn how to duplicate it. Discussion/Team Activity: Discuss examples of firms that have sustainable competitive advantage in each skill and asset source listed. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Sources of Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage LO5 Review Learning Outcome Sources of Competitive Advantage Sources of Competitive Advantage Cost $ Product/Service Differentiation A vs. B vs. C Niche Strategies Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Strategic Alternatives
Chapter 2 Strategic Planning for Competitive Advantage Strategic Alternatives Market Penetration Market Development Product Development Diversification Increase market share among existing customers Attract new customers to existing products Introduce new products into new markets Create new products for present markets Notes: Examples of Strategic Alternatives Market Penetration: Manufacturer cents-off coupons McDonald’s Happy Meals with Ty’s Teeny Beanie Babies Market Development: Sara Lee is entering the market for meals on the go by introducing Hillshire Farm Salad Entrees, kits that contain meat and other ingredients that the company already makes, to be added to lettuce. Product development: Brooks Brothers Joseph A. Bank Clothiers Diversification: Coca-Cola’s water-treatment and water-conditioning equipment Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Ansoff’s Strategic Opportunity Matrix
Chapter 2 Strategic Planning for Competitive Advantage Ansoff’s Strategic Opportunity Matrix Present Product New Product New Market Market Penetration Development Product Diversification Present Market Notes: Exhibit 2.4 is an example of Ansoff’s Strategic Opportunity Matrix for McDonald’s. Discussion/Team Activity: Select various companies and complete the Ansoff Strategic Opportunity Matrix. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Portfolio Matrix Stars Cash Cows Problem Children Dogs Notes: The Portfolio Matrix from Boston Consulting Group classifies each SBU by its present or forecast growth and market share. The assumption is that market share and profitability are strongly linked. A star is a fast-growing market leader. Stars usually have large profits but need cash to finance growth. A marketing tactic is to protect market share by reinvesting earnings in product improvement, distribution, promotion, and production efficiency. Strive to capture new users as they enter the market. A cash cow generates more cash than it needs to maintain market share. It is in a low-growth market, but the product has dominant market share. The marketing strategy is to maintain market dominance by being the price leader and by making technological improvements. Allocate excess cash to high-growth prospects. A problem child shows rapid growth but poor profit margins. It has a low market share in a high-growth industry. It needs a great deal of cash to prevent conversion to dog status. Strategies are to invest to gain better market share, acquire competitors, or drop the SBU. A dog has low growth potential and a small market share. Most dogs leave the market. The strategy options are to divest or harvest. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Portfolio Matrix Strategies
Chapter 2 Strategic Planning for Competitive Advantage Portfolio Matrix Strategies Build Hold Harvest Divest Note: Build: If an SBU has the potential to be a star, building would be an appropriate goal. Hold: If an SBU is a successful cash cow, a goal would be to hold or preserve market share. Harvest: This is an appropriate strategy for all SBUs except stars. The basic goal is to increase short-term cash return without much concern for the long-run impact. Divest: Getting rid of SBUs with low shares of low-growth markets is often appropriate. Problem children and dogs are suitable for this strategy. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Strategic Alternatives
Chapter 2 Strategic Planning for Competitive Advantage Review Learning Outcome Strategic Alternatives LO6 Identify strategic alternatives Diversification = Product development = products Market development = customers Market penetration = share new products + new markets Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Describing the Target Market
Chapter 2 Strategic Planning for Competitive Advantage Describing the Target Market Discuss target market strategies. LO7 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Marketing Strategy Marketing Strategy- The activities of selecting and describing one or more target markets and developing and maintaining a market mix that will produce mutually satisfying exchanges with target markets. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Target Market Strategy
Chapter 2 Strategic Planning for Competitive Advantage Target Market Strategy Segment the market based on groups with similar characteristics Analyze the market based on attractiveness of market segments Select one or more target markets Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Target Market Strategy
Chapter 2 Strategic Planning for Competitive Advantage Target Market Strategy Appeal to the entire market with one marketing mix Concentrate on one marketing segment Appeal to multiple markets with multiple marketing mixes Notes: Three strategies for selecting target markets are shown here. These strategies are discussed in detail in Chapter 8. Discussion/Team Activity: Discuss the differences in the target markets for McDonald’s, Burger King’s, and Wendy’s. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Target Market Strategies
Chapter 2 Strategic Planning for Competitive Advantage Review Learning Outcome Target Market Strategies LO7 Entire Market Multiple Markets Single Market Target Market Options Copyright 2012 by Cengage Learning Inc. All Rights Reserved

The Marketing Mix A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. i Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage Marketing Mix: The “Four Ps” Price Promotion Place Product Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Chapter 2 Strategic Planning for Competitive Advantage Marketing Mix: The “Four Ps” The starting point of the “4 Ps” Includes Physical unit Package Warranty Service Brand Image Value Product Products can be… Tangible goods Ideas Services Notes: The product is the starting point of the marketing mix. It is difficult to decide on a promotion campaign, determine a price, or design a distribution strategy until the product offering and product strategy are defined. The product is not only the physical unit but also the packaging, warranty, after-sale service, brand name, company image, value, and other factors. Products may be tangible goods, services, and ideas. Product decisions are discussed in Chapter 10 and 11, services marketing in Chapter 12. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Chapter 2 Strategic Planning for Competitive Advantage Marketing Mix: The “Four Ps” Product availability where and when customers want them All activities from raw materials to finished products Ensure products arrive in usable condition at designated places when needed Place Notes: The goal of distribution is to ensure products arrive in usable condition at the right place when customers need them. Distribution is covered in Chapters 15 and 16. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Chapter 2 Strategic Planning for Competitive Advantage Marketing Mix: The “Four Ps” Promotion Role is to bring about exchanges with target markets by: Informing Educating Persuading Reminding Includes integration of: Personal selling Advertising Sales promotion Public relations Notes: Promotion includes personal selling, advertising, sales promotion, and public relations. Each element of the promotion mix is coordinated with the others to create a promotional blend. Integrated Marketing Communications is discussed in Chapters 16, 17, and 18. Technology-driven aspects of promotional marketing are covered in Chapter 21. A good promotion strategy can increase sales, but does not guarantee success. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Chapter 2 Strategic Planning for Competitive Advantage Marketing Mix: The “Four Ps” Price Price is what a buyer must give up to obtain a product. The most flexible of the “4 Ps”-- quickest to change Competitive weapon Price x Units Sold = Total Revenue Notes: Price is an important competitive weapon and is often the most flexible of the marketing mix. Of the four Ps, it can be changed most quickly. Price multiplied by the number of units sold equals total revenue for the firm. Pricing decisions are discussed in Chapters 19 and 20. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Elements of the Marketing Mix
Chapter 2 Strategic Planning for Competitive Advantage Review Learning Outcome Elements of the Marketing Mix LO8 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Following Up on the Marketing Plan
Chapter 2 Strategic Planning for Competitive Advantage Following Up on the Marketing Plan Explain why implementation, evaluation, and control of the marketing plan are necessary. LO9 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Following Up the Marketing Plan
Chapter 2 Strategic Planning for Competitive Advantage Following Up the Marketing Plan Implementation Evaluation Control Marketing audit is… Comprehensive Systematic Independent Periodic Notes: Implementation is the process that turns marketing plans into action assignments and ensures that these assignments are executed in a way that accomplishes the plan’s objectives. These activities may involve job assignments, activity descriptions, timelines, budgets, and lots of communication. Implementation is essentially “doing what you said you were going to do.” However, many organizations repeatedly experience failures in strategy implementation. The marketing audit provides the mechanisms for evaluating marketing results compared to the plan’s goals. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome
Chapter 2 Strategic Planning for Competitive Advantage LO9 Review Learning Outcome Implementation, Evaluation, and Control Product Place Promotion Price Met objectives? Implementation Evaluation Audits comprehensive systematic independent periodic Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Effective Strategic Planning
Chapter 2 Strategic Planning for Competitive Advantage Effective Strategic Planning Identify several techniques that help make strategic planning effective. LO10 Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Effective Strategic Planning
Chapter 2 Strategic Planning for Competitive Advantage Effective Strategic Planning Effective Strategic Planning requires… Continual attention – ongoing rather than annual Creativity – challenging assumptions Management Commitment – support and participation from the top Notes: Continual Attention – Strategic planning should not be an annual exercise, but rather an ongoing process because the environment is continually changing and the firm’s resources and capabilities are continually evolving. Creativity – Managers should challenge assumptions about the firm and the environment and establish new strategies. Management Commitment – Support from top management is arguably the most important element of successful strategic planning. Copyright 2012 by Cengage Learning Inc. All Rights Reserved 61 61

Review Learning Outcome
Chapter 2 Strategic Planning for Competitive Advantage Review Learning Outcome LO10 Techniques for Effective Strategic Planning Effective Strategic Planning Continual attention Creativity Management commitment Notes: Effective strategic planning requires continual attention, creativity, and management commitment. 2. Strategic planning is not an annual event, but an ongoing process. The environment is continually changing, and the firm’s internal resources and capabilities are continually evolving. 3. Strategic planning is based on creativity. Assumptions about the firm and the environment should be challenged and new strategies established to sustain competitive advantage. 4. Management support and participation are critical to the success of strategic planning. Copyright 2012 by Cengage Learning Inc. All Rights Reserved

Chapter 2: Strategic Planning for Competitive Advantage

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