For slide no.

In the past chapters we learned that the commitment of managers and employees are what makes the
company excellent in creating satisfied customers. In this chapter, we will learn how the companies
adapt to a continuously changing marketplace.

For slide no. 2

Strategic planning and its set of special concepts and tools emerged in the 1970s as a result of
succession of shock waves such as energy crisis, double digit inflation, economic stagnation and so on.

For slide no. 3

To understand strategic planning, we need to recognize that most largest companies consists of four
organizational levels namely the corporate level, division level, business level and product level.

Corporate headquarters is responsible for designing a corporate strategic plan, where it…… each division
establishes a division plan where…..each business unit in turns develops a business unit strategic plan
where it…..finally each product level within a business unit develops a marketing plan….

For slide no. 4

These plans are then implemented at the various levels of the organization, results are monitored and
evaluated and corrective actions are taken.

For slide no. 5

Recently, the consulting firm of Arthur D. Little proposed a model of the characteristics of a high
performance business. They pointed to the four factors shown in this figure.

For slide no. 6

First is the stakeholders. The stakeholders are the customers, employees, suppliers and distributors.

The progressive company creates a high level of employee satisfaction which leads to employees to
work on continuous improvements as well as breakthrough innovations. The result is higher quality
products and services which create higher customer satisfaction. Their satisfaction leads to repeat
business and therefore higher growths and profits, both which deliver high stockholder satisfaction.

For slide no. 7

(Just read)

For slide no. 8

….And lastly, organization….

For slide no. 12

Most companies operate several businesses. However, they often fail to define them carefully.
For slide no. 14

The market growth rate of the vertical axis indicates the annual growth rate of the market in which
businesses operate. In the figure, it ranges 0-20%. A market growth rate of above 10% is considered
high.

The horizontal axis, relative market share, refers to the SBU’s market share relative to their largest
competitor. It measures the company’s strength in the relevant market. Relative market share is divided
into high and low share using 1.0 as the dividing line.

For slide no. 17

Market attractiveness varies with ____ and so on. And business strength varies with the _____ and so
on.

(read the side box on the right)

This figures shows a hypothetical rating for the hydraulic pumps business. Management rates each
factor from 1 (very unattractive) to 5 (very attractive) to reflect how the business stands on that factor.

For slide no. 18

the 9 cells are divided into three zones

1. 3 cells of top left – strong SBUs in which the company should invest and grow
2. 3 diagonal cells medium in overall effectiveness
3. 3 cells in the bottom left – weak SBUs divest or harvest these.

For slide no. 19

The final step is for management to decide what it wants to do with each business. This figure outlines
plausible strategy options for business in each cell.

For slide no. 20

The use of portfolio models has produced a number of benefits ….

On the other hand, portfolio models must be used cautiously….