1. CHAPTER 4 Market-Oriented Strategic Planning

2. PERSPECTIVES OF THE FIRM  Objective of the firm is to:  Maximize profits - Economist  Maximize shareholder value – Financial type  Create customer-satisfying value at a profit - Marketing  Balance the interest of shareholders, customers, employees, suppliers, and the community – Management type.  These perspectives shape the strategic planning process within the firm.

3. THE FIRM AS A SYSTEM  The following are performed:  Coordination, integration, Mutual Purpose, An Objective  Objective of superior customer value at reduced cost provides guidance and direction  Market realities drive the firm

4. MARKET ORIENTATION  There are three behavioral components:  Customer Orientation  Competitor Orientation  Inter-functional Coordination  There are two Decision Criteria:  Long-Term Focus  Profitability

6. STRATEGIC PLANNING  Developing a game plan for achieving long- run objectives based upon existing opportunities and resources.  Strategy should ensure long-run survival and growth  The aim of strategic planning is to develop a Sustainable Competitive Advantage (Low Cost, Focus, Differentiation, Preemptive Move, Synergy).

7. Porter’s Generic Competitive Strategies

8. Porter’s Competitive Strategies Cost Leadership: –Low-cost competitive strategy –Aimed at broad mass market –Aggressive construction of efficient- scale facilities –Cost reductions –Cost minimization

9. Porter’s Competitive Strategies Differentiation: –Broad mass market –Unique product or service –Charge premiums –Lower customer sensitivity to price

10. Porter’s Competitive Strategies Cost focus: –Low cost competitive strategy –Focus on particular buyer group or market –Niche focused –Seek cost advantage in target market

11. Porter’s Competitive Strategies Differentiation focus: –Focus on particular group or geographic market –Seek differentiation in targeted market segment –Serve special needs of narrow target market Stuck in the middle: –No competitive advantage –Below-average performance

12. STRATEGIC MARKET PLANNING  With Strategic Planning There Are THREE Key Questions:  1.) Where is the firm now?  2.) Where does the firm want to be in a specified time-frame?  3.) What is the best way to get there (what actions should we take and what are the risks and rewards?  This process provides ideas, enable managers to evaluate opportunities, develop and implement plans, and monitor results.

13. Basic Model of Strategic Management  FOUR BASIC ELEMENTS

14. STRATEGIC PLANNING PROCESS  Plan (Corporate, Business, Product)  Implement (Organize, Implement)  Control (Measure results Analyze, Take Corrective Actions ).  Mission >>> Objectives & Goals >>> Portfolio Plan >>> Business Plan

15. STRATEGIC PLANNING PROCESS  Mission – clear statement providing a sense of opportunity and direction in terms of customer needs, groups and technologies  Objectives & Goals – Actionable quantitative and realistic restatement of the mission  Portfolio Plan – Analysis of each business unit of analysis in terms of profitability, market share, attractiveness or other relevant measures (BCG Growth/Share Matrix, GE Multifactor Matrix).

16. STRATEGIC PLANNING GAP  Kotler identifies the firm’s Strategic Planning Gap as the difference between the actual and desired or expect sales.  For change to occur, the gap must be large enough to move the firm to strategic action.  Once the gap is recognized management can move to fill the gap ( Intensive Growth – action within present product-market scope, Integrative Growth opportunities within firm’s market system, Diversification opportunities outside firm’s marketing system )

17. GROWTH STRATEGIES  Market Penetration (Present markets & Products)  Product Development - (Present Markets, New Products)  Market Development - (Present Products, New Markets)  Diversification (New Products, New Markets)  Vertical Integration