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McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

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Presentation on theme: "McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved."— Presentation transcript:

1 McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

2 Chapter 6 Market Strategy

3 ELEMENTS OF BUSINESS STRATEGY Determining the product market to serve (What markets do we serve with what products) Determining the level of commitment to provide resources ( What level of investment in the product market are we willing to make) Determining the objectives and plans for each functional area (What are the detailed aims and action plans) 1 3 4 Determine partner relationship commitments ( How do agreements impact choices) 2 6-3

4 CRITICAL ELEMENTS IN A STRATEGIC PLAN Determining the product market to serve (What markets do we serve with what products) Determining the level of commitment to provide resources ( What level of investment in the product market are we willing to make) Determining the objectives and plans for each functional area (What are the detailed aims and action plans) 1 2 3 6-4

5 STRATEGY PROCESS MODEL 1 EXTERNAL ANALYSIS SELF (INTERNAL ANALYSIS Evaluate opportunities, threats and strategic questions Evaluate strengths, weaknesses, problems, constraints, questions STRATEGY IDENTIFICATION AND SELECTION Exhibit 6-2 6-5

6 STRATEGY PROCESS MODEL 2 Negotiate final plan Measure progress toward objectives Audit Develop financial documents Update historical data Collect current situation data Data analysis Develop objectives, strategies, programs Exhibit 6-2 6-6

7 Strategy integration and capability development Gap analysis Environmental scanningStrategy development 1.Define mission 2.Develop statement of operating principles and values 3.Define vision 4.Define goals Strategic planning foundation Track 1 Track 2 5.Define planning assumptions & implications: Develop consensus re: environment (customer/market, competition, suppliers, etc.) 6.Define total market & most attractive segments 7.Define leadership requirements, assess long-term strengths & weaknesses in attractive segments 8.Select segments and define corporate & segment strategy Business strategy Track 3 9.Define capability gaps by assessing strengths/ weaknesses against current capabilities & specific competitors in selected segments 10.Formulate strategies that yield competitive advantage 11.Appraise, test & reconcile strategy with functional plans/ needs 12.Modify goals if required, set functional and business objectives Strategy integration capability development STRATEGY PROCESS MODEL 3 Exhibit 6-2 6-7

8 HIGH IMPORTANCE Assistance in cost control OVERACHIEVEMENT UNDERACHIEVEMENT Consistent product quality and appearance Reliable delivery Sales support Fast order cycle Lead generation Access to top management HIGH PERFORMANCE WANTS-GETS GRID Exhibit 6-5 6-8

9 CONCEPTUAL MAP Exhibit 6-6 Reputation for Excellence NOVUS MAVUUS CLARKE T3T3 Project manager’s competency Hi Lo Bad Good 6-9

10 Share of user $ $15mm$10mmTotal spending by users 100% 2 50%60%Users 200 Distributors 130 Manufacturers 101 50%40% 1 20052000 Users 300 Dealers 150 Specialty Wholesalers 120 Manufacturers 100 VALUE CHAIN ANALYSIS Exhibit 6-7 6-10

11 Threat of substitutes Bargaining power of suppliers Struggles between industry rivals Bargaining power of customers Threat of potential entrants FIVE FORCES OF COMPETITION Exhibit 6-8 6-11

12 BARRIERS TO ENTERING A MARKET PRODUCT DIFFERENTIATION ECONOMIES OF SCALE CAPITAL REQUIREMENTS ACCESS TO DISTRIBUTION CHANNELS COST DISADVANTAGES UNRELATED TO SIZE GOVERNMENT POLICY Exhibit 6-9 6-12

13 ACTIONS TO MEET COMPETITIVE CHALLENGES CHOOSE ITS COMPETITIVE BATTLEGROUND JUDICIOUSLY CHANGE THE COMPETITIVE STRUCTURE OF THE INDUSTRY ANTICIPATE AND EMPLOY CHANGE 6-13

14 Vision for disruption Sustaining the momentum by developing flexible capacities for: Seizing initiative to gain advantage by Shifting the rules Signaling Simultaneous & sequential strategic thrusts Market disruption Identifying and creating oppor- tunities for temporary advantage through understanding Directed at identifying new ways to serve existing customers better or new customers that no one else serves now Capability for disruption that can be applied across many actions to build a series of temporary advantageous with actions that shape, mold, or influence the direction on nature of the competitors’ responses Tactics for disruption Stakeholder satisfaction Strategic soothsaying Speed Surprise Exhibit 6-10 6-14

15 Disrupt Cat’s strategic strengths Outmaneuver Cat’s strengths (“Encircle” Cat) Boost quality Lower cost Timing Rolls out one product at a time Geographic Komatsu moves out of Japanese stronghold to Asia, Europe, South America, and lastly North America Know-how Aggressive R&D and new product program Channels Komatsu moves to direct sales, dealers, then regional centers Komatsu builds resources, new plants and user alliances to Gain strengths initially Erodes Cat’s premium price, global volume, low costs Picks off Cat’s full line one by one Undermines Cat’s advantage on product innovation Erodes Cat’s World dominance one place at a time Maneuvers around Cat’s strong dealer network Erodes Cat’s deep pockets Arena 1 Cost & Quality Arena 2 Timing & Know-how Arena 3 Strongholds Arena 4 Deep Pockets KOMATSUV CATERPILLAR From the Field: 6-1 6-15

16 MARKET ORIENTATION ELEMENTS BEING SYSTEMATIC IN: 1.Gathering of information on customers and competitors 2.Analyzing information to develop market knowledge 3.Using this knowledge to guide strategy 6-16

17 PAYOFFS FROM A MARKET ORIENTATION A MARKET ORIENTATION COMPANY IS: 1.BETTER AT FITTING NEEDS OF CUSTOMERS 2.MORE DIFFICULT FOR COMPETITORS TO ASSESS 3.APT TO BE UNIQUE 6-17

18 REQUISITES FOR THE LEARNING ORGANIZATION x x x x Visionary leadership Information systems Execution Creating & striving Target & trajectory Exhibit 6-13 6-18


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