2. Strategic Planning

3. Forces you to make choices on what you will & won’t do

4. Separation of Strategic Planning & Marketing Implementation
Very Much
Strategic Planning
Commitment
Understanding
Responsibility
Time Spent
Strategy
Implementation
Very Little
Chief
Executive Officer
Mid-level
Managers
Customer
Contact

5. 90% fail to execute strategy successfully
The Result:
Only 5% of workforce aware of “the” strategy
Only 25% of managers have incentives linked to strategy
60% of organizations don't link budgets & strategy
85% of executive teams spend <1 hour/ month discussing strategy
90% fail to execute strategy successfully
Robert S. Kaplan and David P. Norton
The Strategy-Focused Organization,

6. BUSINESS PLAN Answers 3 Critical Q’s:
1.Where are we now?
2.Where do we want to go
3.How do we get there?
= Situation Analysis

7. Org. goals & objectives encapsulated in Mission & Vision Statements: Answers Question # 2:
2. Where do we want to go?
What business(es) should be in
Market positions to stake out?
Consumer needs & segments serve?
Outcomes to achieve?

8. 3.How do we get there? Final Question answered by Strategic Planning:
1.Where are we now?
2.Where do we want to go?
3.How do we get there?
*Growth, Competitive & Functional Strategies

9. The Big Picture Company Consumers Competitors Conditions
Situation/SWOT Analysis
Strategic Planning
Functional Integration
Performance Assessment
Company
Consumers
Competitors
Conditions
PEST
Growth & Competitive Strategies
Finance HR
Production
R&D
Marketing
Functional Integration
Profits
Mrkt Share
ROA
ROS
ROE
Asset T/O
Stock
Mrkt Cap

10. Intro & Overview of Course
Preliminary Situation Analysis
Organize Companies/ Register w/ Capstone
Select Competitive Strategy
Take the Dr. F Management Pledge
Preview your Balanced Scorecard

11. 1st Organize Companies

12. Leaders responsible for assuring strategy links values & vision ...
Strategic Thinking- the ten big ideas
Prof Thomas/ Penn St. able to predict final standings w/in 1 place 90% of time –after observing initial group interaction...
7. Corporate culture &
8. Leadership craft...
Leaders responsible for assuring strategy links values & vision ...

13. Intro & Overview of Course
Preliminary Situation Analysis
Organize Companies/ Register w/ Capstone
Select Competitive Strategy
Take the Dr. F Management Pledge
Preview your Balanced Scorecard

14. Design, produce, market more efficiently than competitors
You can Formulate Strategy based on what Competitive advantage you focus on:
Cost:
Design, produce, market more efficiently than competitors
Differentiation:
Deliver unique & superior value in terms of product quality, features, service

15. You can also Formulate Strategy by: Competitive Scope/ MARKET FOCUS Number & Nature of segments compete w/in-

16. & You can also Formulate Strategy by-Riding a Products Life Cycle
Adjust Marketing Mix according to natural Drift of products w/in segments-

17. Put them all together &…
Cost/Quality Differentiation
Number & nature of segments compete w/in
Riding the Product Life Cycle

18. Competitive Strategy Matrix
Number & nature of
segments compete w/in
Ride Product LifeCycle #2 #3
Compete on:
Broad Market
Niche Mrkt
Evolving Mrkt
Cost
Competitive Strategy Matrix #1
Product Quality

19. Competitive Strategy Matrix
Broad Mrkt
Niche Mrkt
Evolving Mrkt
Compete on:
Overall Cost Leader
Cost Leader- Lo -Tech Focus
Cost Leader - PLC
Lo+Trad+Hi
Differentiator-
Differentiator Hi- End Focus
Differentiator- PLC
Cost
Product Quality

20. Strategic Thinking- the ten big ideas 6. Resource allocation models –
Porter: strategic choices are set of basic generic strategies
(low cost, differentiation, market focus)

21. “If you don’t know where you are going
Porter “What is Strategy”
“If you don’t know where you are going
any road will get you there.” Lewis Carroll, -- Chapter 6, Alice in Wonderland

22. Competitive Strategies Span Level 2 of MGT
Corporate-Level : In what business should we compete?
Corporation
Business-Level : How should we compete?
Sensors Unit
Cons.Elec. Unit
Nano-Tech Unit
Functional-Level : How do we coordinate?
Finance
HR / R&D
Production
Marketing

23. What Advantage can we create & sustain against our competitors?
& w/in which Market Segments should we compete?

24. Strategic Choice: Cost Leadership
Overriding goal = increased efficiency & lower costs relative to rivals
Minimize costs (Marketing, R&D & Production..)
Advantages
A cost leader able to charge lower prices
Even at same price- greater profitability

25. Strategic Choice: Differentiation
Create a product that customers perceive as distinct/unique & offer superior quality/service
Advantage
Customers expect & willing to pay premium prices

26. Strategic Choice: Differentiation
Will have significant expenditures in R&D & production…. want/need to make high quality/highly desirable product
Significant expenditures in marketing… develop greater brand equity —thru increased awareness of product quality
Greater Equity = Greater loyalty =
Less price sensitivity

27. Broad Differentiation Differentiation - PLC
Niche Differentiation Hi -Tech Focus
Differentiation - PLC
Lo+Trad+Hi
match customers ideal criteria for positioning, age, and reliability.

28. Growth Strategies Present Products New Products Market Penetration-
Increase share among existing customers.
Product
Development
Create new
products for present markets
Present
Markets
Market Development
Attract new customers to existing products
New
Markets
Diversification
new products… new markets… new alliances

29. Select one of the
Six
Basic Strategies

30. Situation/SWOT Analysis Performance Assessment
The Big Picture
Situation/SWOT Analysis
Strategic Planning
Functional Integration
Performance Assessment
Company
Consumers
Competitors
Conditions
PEST
Marketing
Growth
& Competitive Strategies
Profits
Mrkt Share
ROA
ROS
ROE
Asset T/O
Stock
Mrkt Cap
R&D
Production HR
Finance

31. 3rd Level of Strategy Functional Strategy Marketing Corporate Level
Business unit Level
Functional Strategy
Information
systems
Research &
development
Manufacturing
Finance
Marketing
Human resources

32. What makes a decision strategic?
Multi-functional in scope & consequences
Requires choice & trade-offs, integration & alignment
entrepreneur theorizing
develop a view of the world and how you fit in it
Environmental Scanning 6 12 12

33. INTERNAL STRATEGIC ALIGNMENT
FINANCE
Achieved when :
All Decisions made by & within all functional areas are in sync w/ one another,
As well as with the overall strategic direction of the firm
PRODUCTION
MARKETING

34. Examples of Strategic Alignment
NOTES:

36. Distinctive Competencies Distinctive Competencies
When all decisions made by & within all functional areas are in sync w/ one another,
As well as w/ your overall strategic direction -- you achieve…
Distinctive
Competencies
Distinctive
Competencies

37. Distinct competencies needed to achieve selected competitive strategy
Advantage*
Distinctive
Competencies
*Achieved when you sustain profits above Industry Average

38. Areas in which you can develop “Distinct Competencies”
MARKETING: Awareness & Accessibility
R&D: Product innovation & design
PRODUCTION: Plant Automation & utilization
Human Resources: Worker Expertise & Training

39. Achieving Competitive Advantage thru Cost-Focused Strategy
Allows for good profit margins on sales while keeping prices low especially in price-sensitive segments…
Functional Alignment
Production
Automation - pursued early & aggressively
Capacity improvements unlikely (may run overtime instead)
Marketing
Spend moderately on promotion & sales
R&D
Spend minimally on R&D

40. Differentiator Seeks to create maximum awareness & brand equity.
Wants to be well known as a maker of high quality/highly desirable products
Functional Alignment
Production
Less likely to invest in increased automation or production capacity
Marketing
Spend heavy on advertising & sales to create maximum awareness & accessibility
Prices tend to be higher
R&D
High R&D spending - keep products fresh

41. I Promise to : Meet customers’ key buying criteria...
Spend $$ at optimal levels & in best channels to achieve my awareness & accessibility objectives...
Align production Capacity & produce products commensurate with Demand...
Maximize production efficiencies w/
appropriate Levels of Automation
investment in my Company's People (Training & Recruitment) & Processes (TQM & Process Initiatives)
optimal use of 2ND Shift
Deliver adequate Levels of:
Return for Investors (ROE)