Strategic Position techniques and Strategic planning Techniques

Strategic Position Techniques and Strategic Planning TechniquesCompany and strategy1.2-Strategic PlanningCompany and strategy Setting Firm Objectives and GoalsThe mission should be translated into supporting objectives for each level of management.Creates a hierarchy of objectives that are consistent with one another. For example:Business objective: Increase profits.Marketing objective: Increase market share of domestic and international markets.

Company and strategy Designing the Business PortfolioThe business portfolio is the collection of businesses and products that make up the company.The company must:Analyze its current business portfolio or strategic business units (SBUs);Decide which SBUs should receive more, less, or no investment; andDevelop strategies for growth and downsizing.Company and strategy Designing the Business PortfolioStrategic business unit:A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses.An SBU can be a company division, a product line within a division, or sometimes a single product or brand.

Company and strategy Designing the Business Portfolio

PRODUCT RANGEThe number or scale of choice of the products or services offered by a supplier.Product line : width and depth

Product AProduct BPRODUCT CPRODUCT DSIZE 1SIZE 1

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SIZE 1

SIZE 2

SIZE 2

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SIZE 4Additionally , each product in the product line may have widthPRODUCT ASIZE 1SIZE 2COLOURYELLOWXXREDXBLUEXGREENXPRODUCT RANGE SIZE AND COLOURPRODUCT PORTFOLIO PLANNINGPRODUCT MIXCHARACTERISTICS OF COMPANY PRODUCT LINEWIDTHNUMBER OF PRODUCT LINESDEPTHAVERAGE NUMBER OF ITEMS PER PRODUCT LINECONSISTENCYCLOSENESS OF RELATIONSHIP IN PRODUCT RANGE EG. END USERS, PRODUCTION, DISTRIBUTIONCompany and strategy Designing the Business PortfolioProduct PortfolioThe dynamics of the marketplace and the increasing progress of competitors indicate that firms need continually to innovate and develop new products.The Boston Consulting Group (BCG) has developed a model for guiding which new and established products should receive future investment in the development of new productsThe Boston Consulting Group Box (BCG Box)

Company and strategy Designing the Business Portfolio

Company and strategy Designing the Business Portfolio1. Cash flow from cash cows3. Finance promising question marksQuestion marks become starsStars become future cash cows2. Consolidate existing starsStars become future cash cowsQuestion marks with low prospects abandoned4. DogsRevitalize with focus strategy Divest Company and Marketing strategy 2.3 -Designing the Business PortfolioDeveloping strategies for growth and downsizingPRODUCT MARKET MIXProduct market mix is a shorthand term for products/services a firm sells and the market it sells them to.ANSOFF GROWTH VECTOR MATRIX Existing ProductsNew ProductExisting MarketsNew MarketsMARKET PENETRATIONPRODUCT DEVELOPMENTMARKET DEVELOPMENTDIVERSIFICATIONProduct/Market Expansion Grid

Market penetrationExisting markets, existing productsMarket developmentNew markets, existing productsProduct developmentExisting markets, new productsDiversificationNew products, new markets

Strategic position and action evaluation STRATEGIC OPTIONSAGGRESSIVECONSERVATIVEDEFENSIVECOMPETETIVETWO INTERNAL DIMENSION

Financial strength (FS)Competitive advantage (CA)TWO EXTERNAL DIMENSIONEnvironmental stability (ES)Industry strength (IS)SPACE FACTORSINTERNAL STRATEGIC POSITIONFinancial strengthReturn on investmentLiquidityWorking capitalCash flowInventory turnover

EXTERNAL STRATEGIC POSITIONEnvironmental stabilityTechnological changesRate of inflationDemand variabilityBarriers to entryPrice elasticity

21SPACE FACTORSINTERNAL STRATEGIC POSITIONCompetitive advantage (CA)Market shareProduct qualityProduct life cycleCustomer loyaltyTechnological know how

EXTERNAL STRATEGIC POSITIONIndustry strength (IS)Growth potentialProfit potentialFinancial stabilityResource utilizationEase of entry into marketStrategic optionsIf the Companies Financial Strength is high and Industrial Strength is High too They should go for a Aggressive strategyIf the Companies Financial strength is high but competitive advantage is low They should go for Conservative StrategyStrategic optionsIf the companies Industrial Strength is high But environment stability is low They should have a Competitive strategyIf the companies competitive advantage is low and environmental stability is low too They should go for Defensive Strategy

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