DEVELOPING A

STRATEGIC BUSINESS

Toolbox

DEVELOPING A
STRATEGIC BUSINESS
PLAN
Strategic Planning
…is the managerial process of
developing and maintaining a
strategic fit between the
organization's objectives and
resources and its changing market
opportunities.

Org Objectives Strategic Fit Resources

Changing Environment
The Role of Strategy

Corporate Strategy:
Mission & •Corporate Operating
Objectives •Business Plans
•Functional
Vision and Strategy
Sun Tze on Strategy

“Know your enemy, know yourself, and

your victory will not be threatened. Know
the terrain, know the weather, and your
victory will be complete.”
Strategic Marketing

“Marketing Strategy is a series of

integrated actions leading to a
sustainable competitive advantage.”

John Scully
Corporate Mission
Broad purposes of the
organization
General criteria for assessing the
long-term organizational
effectiveness
Driven by heritage & environment
Mission statements are
increasingly being developed at
the SBU level as well
Examples of Corporate
Mission
SINGAPORE AIRLINES is engaged in
air transportation and related
businesses. It operates world-wide
as the flag carrier of the Republic
of Singapore, aiming to provide
services of the highest quality at
reasonable prices for customers
and a profit for the company
Examples of Corporate
Mission (cont’d)

MARRIOTT’S Mission Statement:

We are committed to being
the best lodging and food service
company in the world, by treating
employees in ways that create
extraordinary customer service
and shareholder value
Corporate Culture
The most abstract level of
managerial thinking
How do you define culture?
What is the significance of culture
to an organization?
How does marketing affect culture
in the organization?
Corporate Objectives &
Goals
An objective is a long-range
purpose
◦ Not quantified and not limited to a time
period
◦ E.g. increasing the return on shareholders’
equity
A goal is a measurable objective
of the business
◦ Attainable at some specific future date
through planned actions
◦ E.g. 10% growth in the next two years
Strategic planning
 STRATEGIC PLAN
DEVELOPMENT
Environmental and internal Strategic definition and

• What are the major • What strategy will you

changes in industry pursue over the next 3
dynamics and years?
resulting
+ +
• What are your • What will be the
competitive impact of major
strengths and

+ +
• How does your • What are the expected
current business financial returns of
emphasis fit with your strategy?
industry
+
• What strategic
alternatives have you
The Usual Business Planning
Hierarchy
Strategic Planning – Many
Sub Plans
Framework of a Successful
Organisation
Business Planning and
Delivery
 Vision is a Critical Driver
 To succeed in the
long term, our
business needs a
vision of how we will
change and improve
in the future.
 “without a vision, the
people perish”
  The vision of the
business gives its
energy.
◦ It helps motivate us.
◦ It helps set the
direction of corporate
and marketing
strategy.
Values underpin all we do
Values form the foundation of a business’ management style.
 Values provide the justification of behaviour and, therefore, exert significant
influence on marketing decisions.
 An example is provided by BT Group - defining its values:
  BT's activities are underpinned by a set of values that all BT people are asked
to respect:
◦ We put customers first
◦ We are professional
◦ We respect each other
◦ We work as one team
◦ We are committed to continuous improvement.
  These are supported by our vision of a communications-rich world - a world in
which everyone can benefit from the power of communication skills and
technology.
  A society in which individuals, organisations and communities have unlimited
access to one another and to a world of knowledge, via a multiplicity of
communications technologies including voice, data, mobile, internet -
regardless of nationality, culture, class or education.
  Our job is to facilitate effective communication, irrespective of geography,
distance, time or complexity.
Source: BT Group plc website
 Has the Company got a
strong Clear Mission?
 The Business Mission
is important to our
sales & marketing
planning
 It provides an outline of
how the marketing plan
should seek to fulfil the
mission
 It provides a means of
evaluating and
screening the
marketing plan; are
marketing decisions
consistent with the
mission?
"Strategy is the direction
and scope of an
organisation over the long-
term: which achieves
advantage for the
organisation through its
configuration of resources
within a challenging
environment, to meet the
needs of markets and to
Strategic Audit
- ensuring that the Company resources and
competencies are understood and evaluated
Need to work within Company
Resources & Constraints
Objectives - Corporate &
Functional
Value Chain Analysis
 Value Chain Analysis describes the activities that take place in a business
and relates them to an analysis of the competitive strength of the
business.
 Michael Porter suggested that the activities of a business could be
grouped under two headings:
1. Primary Activities - those that are directly concerned with creating and
delivering a product (e.g. component assembly); and
2. Support Activities, which whilst they are not directly involved in production,
may increase effectiveness or efficiency (e.g. human resource management). It
is rare for a business to undertake all primary and support activities.
 Value Chain Analysis is one way of identifying which activities are best
undertaken by our business and which are best provided by others
("outsourced").

 Linking Value Chain Analysis to Competitive Advantage

 What activities a business undertakes is directly linked to achieving
competitive advantage.
 For example, if we wish to outperform our competitors through
differentiatingourselves through higher quality then we will have to
perform our value chain activities better than the opposition.
 But if we adopt a strategy based on seeking cost leadership this will
 Value Chain
Innovatio Operatio Post Sales
n n Process
Process
Process
Identificatio Satisfactio
n of client’s n of
necessities Client’s
necessities

Market
identificati product Deliver Service
y
on products s / s to the
/ services produc clients
ts and
services creation
service
definitio
Primary Activities
Primary value chain activities
include:
 

Support Activities
Support activities include:
Steps in a Value Chain
Analysis
Core competencies
 Core competencies are those capabilities that are critical to a
business achieving competitive advantage.
 The starting point for analysing core competencies is recognising that
competition between businesses is as much a race for competence
mastery as it is for market position and market power.
 Senior management cannot focus on all activities of a business and
the competencies required to undertake them.
 So the goal is for management to focus attention on competencies
that really affect competitive advantage.
 Core Competencies are not seen as being fixed. Core Competencies
should change in response to changes in the company's environment.
They are flexible and evolve over time. As a business evolves and
adapts to new circumstances and opportunities, so its Core
Competencies will have to adapt and change.
 We need to understand what we are good and what makes us better
and to hone these advantages and to develop new ones to underpin
the business strategy
Identifying Core
Competencies
What is Competitive
Advantage?
“Competitive advantage is a
company’s ability to perform in
one or more ways that
competitors cannot or will not
match.”
Philip
Kotler
“Ifyou don’t have a competitive
advantage, don’t compete.”
Jack Welch, GE
 Four Generic Strategies

Lower Cost Differentiation

Broad
Target

Scope

Narrow
Target
 Other Characteristics of
Competitive Advantage
Substantiality
◦ Is it substantial enough to make a
difference?
Sustainability
◦ Can it be neutralized by competitors
quickly?
Ability to be leveraged into visible
business attributes that will
influence customers
(Source: Strategic Marketing Management,
Aakers)
Seeking Competitive
Advantages
Positions of advantage
◦ Superior customer value
◦ Lower relative total cost
Performance advantages
◦ Customer satisfaction, Loyalty, Market
Share, Profit
Sources of advantages
◦ Superior skills & knowledge, Superior
resources, Superior business process
 WHERE TO COMPETE?
Target customers and segments
• Which customers are you trying to target or
attract?
• Which are you willing to serve, but will not spend
resources to attract?

Customer

Geographical
scope of business How does the
activities entity reach its
• Geographic limits to Geographi target customers
the business? c markets Channels • Which distribution
• Local, regional, multi- channels will you use?
local, national, • What customer
international, or segments can they
reach?

Products

Quality and breadth of the

product line
• Breadth of the product line?
• Quality of the product line?
• Product bundles or a series of unrelated
products?
Capability platform: assessment of
sources of
Example

Physical asset • BHP’s low-cost mines

Location/"space" • Telecomm/media company with

rights
Privileged radio spectrum
Distribution/sales
• Avon’s representatives
network
• Coca-Cola
Brand/reputation
Necessar
y

Innovation • 3M with new products

Distinctive Cross-functional • McDonald’s with QSC&V

competencies coordination
• J&J with branded consumer health
Market positioning products

Cost/efficiency • Emerson Electric’s Best Cost Producer

management
 Extremely relevant

Capability platform: assessment of Somewhat

relevant

sources of competitive advantage Irrelevant

Segments
BU A B C
Overall
Physical asset

Location/"space"
Privileged
assets Distribution/sales network

Brand/reputation
Necessary
capabilities Patent
in order to
succeed in
the industry
Innovation

Cross-functional
Distinctive coordination
competencies
Market positioning

Cost/efficiency
management Talent
development
Step 2: Assess your overall position relative
Step 1: Ensure that these are the
to the capabilities required to succeed in the
capabilities required to succeed in
industry. Also, determine if these
the industry. Use this list as a
capabilities are relevant to the segments
thought starter, add and delete as
you serve
you see appropriate
 Competitor capability comparison
Competito
BU Overall rs
A B C
Physical asset •
•
Location/"space"
Privileged
assets •
Distribution/sales network •

Brand/reputation
Necessar
y Patent

Innovation

Cross-functional
Distinctive coordination
competencies
Market positioning

Cost/efficiency
management Talent

Step 3: Compare the strengths and

weaknesses of your competitive position vs. the
necessary skills
Porter’s 5 Forces of Competitive
Position Diagram
Porter 5 Forces
Porter’s 5 Forces of Competitive
Position version #2
Porter’s 5 Forces of
Competitive Position #3 Entry Barriers
Economies of Scale
Brand Identity
Capital Requirements Rivalry Determinants
Industry Growth
Fixed Costs
New Product Differences
Determinants of Supplier Power Entrants Brand Identity
Switching Costs Exit Barriers
Supplier Volume
Impact
Forward Integration
Industry
Competitor
s
Suppliers Buyers
Intensity
of Rivalry Determinants of Buyer Power
Buyer Concentration
Determinants of Buyer Volume
Substitution Threat Backward Integration
Relative Price
Performance
Switching Costs
Substitutes
 Forces at work framework
1. Determinants of supplier power 2. Determinants of barriers to
• Differentiation of inputs entry
• Switching costs of suppliers and firms in • Economies of scale
the industry • Proprietary product differences
• Presence of substitute inputs • Brand identity
• Supplier concentration • Switching costs
• Importance of volume to supplier • Capital requirements
• Cost relative to total purchases in the • Access to distribution
2. New
industry • Absolute cost advantages
• Impact of inputs on cost or – Proprietary learning curve
differentiation – Access to necessary inputs
• Threat of forward integration relative to – Proprietary, low-cost product design
5. Industry

1. Suppliers
3. Buyers
Intensity of 3. Determinants of buying
5. Rivalry determinants power
• Industry growth • Bargaining leverage
• Fixed (or storage) cost/value added – Buyer concentration vs. firm
• Intermittent overcapacity 4. concentration
• Product differences – Buyer volume
• Brand identity – Buyer switching costs relative to
• Switching costs 4. Determinants of firm switching costs
• Concentration and balance substitution threat – Buyer information
• Informational complexity • Relative price performance – Ability to backward integrate
• Diversity of competitors of substitutes
• Corporate stakes • Switching costs • Price sensitivity
• Buyer propensity to – Price/total purchases
– Product differences
– Brand Identity
– Impact on quality perception
– Buyer profits
– Decision makers' incentives
 Ninety ways to measure
demand (6 x 5 x 3)
World
Geographical
Level Region
Country
Territory
Client
Total
sales
Sector sales
Company’s sales
Produc
t Product lines
Level
Product config
Product
items Short Medium Long
term term term

Timing Level
Strategic Planning Link with
Marketing Planning
 Businesses that succeed do so by creating and keeping customers.
 They do this by providing better value for the customer than the
competition.
 Marketing management constantly have to assess which customers
they are trying to reach and how they can design products and
services that provide better value (“competitive advantage”).
 The main problem with this process is that the “environment” in
which businesses operate is constantly changing.
 So a business must adapt to reflect changes in the environment and
make decisions about how to change the marketing mix in order to
succeed.
 This process of adapting and decision-making is known as marketing
planning.
Strategic vs. Marketing
Plans
Strategic planning is concerned about the overall direction of
the business.
◦ It is concerned with marketing, of course.
◦ But it also involves decision-making about production and operations,
finance, human resource management and other business issues.

 The objective of a strategic plan is to set the direction

of a business and create its shape so that the products
and services it provides meet the overall business
objectives.

 Marketing has a key role to play in strategic planning,

because it is the job of marketing management to understand
and manage the links between the business and the
“environment”. Sometimes this is quite a straightforward
task.
◦ For example, in many small businesses there is only one geographical
market and a limited number of products (perhaps only one product!).
◦ However, consider the challenge faced by marketing management in a
Key issues in strategic and
marketing planning?
 The following questions are key in the marketing and
strategic planning process:
◦ Where are we now?
◦ How did we get there?
◦ Where are we heading?
◦ Where would we like to be?
◦ How do we get there?
◦ Are we on course?

 A marketing plan helps to:

◦ The ability of a business to achieve profitable sales is impacted by
dozens of environmental factors, many of which are inter-connected
◦ Identify sources of competitive advantage
◦ Gain commitment to a strategy
◦ Get resources needed to invest in and build the business
◦ Inform stakeholders in the business
◦ Set objectives and strategies
Situation Analysis
Internal Analysis—company; capability
etc.
External Analysis—customers, market
definition, industry structure
SWOT Analysis
◦ Strengths, Weaknesses,
Opportunities & Threats
◦ Identify & prioritize major problems
and opportunities: selection of key
issues
Based on the firm’s core
competencies, decide on future
options
SWOT
SWOT ANALYSIS Opportunities/Thre
ats

NEUTRALIZ • How are demand

E THREATS and supply
expected to evolve?

YOUR
BUILD ON CONVERT
BUSINESS
STRENGTHS OPPORTUNITIES
Strengths/
Weaknesses

• What are your

BU’s Surfaces potential
ADDRESS opportunities/threats
assets/competenci
WEAK- arising from factors
NESSES external to the business

Can be used as a
thought starter for
competitive analysis and
SWOT Analysis is still a useful
Tool
TOWS matrix

S-O strategies pursue opportunities that are a good fit to

the companies strengths.
W-O strategies overcome weaknesses to pursue
opportunities.
S-T strategies identify ways that the firm can use its
strengths to reduce its vulnerability to external threats.
W-T strategies establish a defensive plan to prevent the
firm's weaknesses from making it highly susceptible to
PEST analysis
A scan of the external macro-
environment in which the
company wants to operate (or
operates) and can be expressed in
terms of the following factors:

◦ Political
◦ Economic
◦ Social
◦ Technological
PEST Analysis - market, business,
proposition, etc.
PEST or SWOT
 A PEST analysis most commonly measures a market;
a SWOT analysis measures a business unit, a
proposition or idea.
 Generally speaking a SWOT analysis measures a
business unit or proposition, whereas a PEST analysis
measures the market potential and situation,
particularly indicating growth or decline, and thereby
market attractiveness, business potential, and
suitability of access - market potential and 'fit' in other
words.
 PEST analysis uses four perspectives, which give a
logical structure, in this case organized by the PEST
format, that helps understanding, presentation,
discussion and decision-making.
 PEST analysis can be used for marketing and business
development assessment and decision-making, and
 Structure-conduct-performance
(SCP) model
Industry Producers

External
shocks S tructure C onduct P erformance

Feedback
• Technology Economics of demand Marketing Finance
breakthroughs • Availability of substitutes • Pricing • Profitability
• Changes in • Differentiability of products • Volume • Value creation
government • Rate of growth • Advertising/promotion Technological
policy/regulations • Volatility/cyclicality • New products/R&D progress
– Domestic Economics of supply • Distribution Employment
– International • Concentration of producers Capacity change
• Import competition • Expansion/contraction
• Diversity of producers • Entry/exit
• Fixed/variable cost • Acquisition/merger/
structure divestiture
• Capacity utilization Vertical integration
• Entry/exit barriers • Forward/backward integration
Industry chain economics • Vertical joint ventures
• Bargaining power of input • Long-term contracts
suppliers Internal efficiency
• Bargaining power of • Cost control
customers • Logistics
• Process R&D
• Organization effectiveness
Definition of risks
Definition

• Risk of loss due to changes in industry and

Business risk competitive environment, as well as shifts in
customer preferences
• Risk due to changes in regulatory environment
Regulatory risk (e.g. deregulation)

• Risk due to major changes in technology

Technology risk

• Risk of failures due to business processes and

Integrity risk operations or people’s behavior, either intentional
(e.g. fraud) or unintentional (e.g. errors)

Macroeconomic • Risk of loss due to changes in the political, social,

risk or economic environments
Management

Management, control and

evaluation
Five disciplines – Peter Senge
Personal Mastery:
◦ Aspiration involves formulating a coherent picture of the
results people most desire to gain as individuals, alongside
a realistic assessment of the current state of their lives
today.
◦ Learning to cultivate the tension between vision and reality
can expand people's capacity to make better choices, and
to achieve more of the results that they have chosen.
Mental Models:
◦ Reflection and inquiry skills is focused around developing
awareness of the attitudes and perceptions that influence
thought and interaction.
◦ By continually reflecting upon, talking about, and
reconsidering these internal pictures of the world, people
can gain more capability in governing their actions and
decisions.
Five disciplines – Peter Senge
Shared Vision:
◦ Establishes a focus on mutual purpose.
◦ People learn to nourish a sense of commitment in a
group or organization by developing shared images
of the future they seek to create, and the principles
and guiding practices by which they hope to get
there.
Team Learning:
◦ Group interaction.
◦ Through techniques like dialogue and skillful
discussion, teams transform their collective thinking,
learning to mobilize their energies and actions to
achieve common goals, and drawing forth an
intelligence and ability greater than the sum of
Five disciplines – Peter Senge
 Systems Thinking:
◦ People learn to better understand
interdependency and change, and thereby
to deal more effectively with the forces that
shape the consequences of our actions.
◦ Systems thinking is based upon a growing
body of theory about the behavior of
feedback and complexity - the innate
tendencies of a system that lead to growth
or stability over time.
◦ To help people see how to change systems
more effectively and how to act more in
tune with the larger processes of the natural
Project management -
processes
Project management – a
process
Project management –
process chain
Project management – risk
analysis
Success Keys -
Deployment
Success Keys -
Communication
Success Keys -
Implementation
Success Keys -
Implementation
Success Keys -
Measurement
Success Keys -
Measurement
Success Keys - Evaluation
 Best Companies Spend more
time on Forward Planning than
Historical Analysis

Achieving Agility Through a New Approach to Forecasting In today’s turbulent economy, rolling forecasts are
proving to be an important new tool in changing the way budgeting and planning has traditionally been
handled. Mary Brandel
Benefits of Rolling
Forecasts