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MGT252H5 (9)
Chapter 2

MGT252 - Chapter 2 Notes.doc

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Matthew Osborne

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Chapter 2 • 2.1 • Strategic planning • The process of developing and maintaining a strategic fit btw the org.’s goals and capabilities and its changing marketing opp. CorporateLevel BusinessUnit,Product& MarketLevel Defining the company’s Setting objectives and Designing the business Planning marketing and mission goals portfolio other functional strategies • Mission statement • A statement of the organization’s purpose - what it wants to accomplish in the larger env. Clear statement acts as an ‘invisible hand’ that guides people in the org. • • Better org. and financial performance • Should be meaningful, specific, motivating, market oriented and defined in terms of satisfying basic customer needs. • Should emphasize the company’s strength in the marketplace • Should not be stated as making more sales or profits (profits are only a reward for creating value for customers) Make employees feel that their work is sig. and that it contributes to ppl’s • lives. • 2.2 • Business portfolio • The collection of businesses and products that make up the company. • Fits the company’s S, W, O in the env. • Planning 1. Analyze its current business portfolio, decide which business should receive more, less or no investment. • Portfolio analysis • The process by which management evaluates the products and businesses that make up the company. • Put strong resources in profitable businesses and drop the weaker ones. • SBU • Company division, product line within a division, a single product or brand. • Attractiveness of the SBUs --> Amount of support each deserves • Boston Consulting Group Approach (BCG) • Classifies all its SBUs according to the growth-share matrix • Growth-share matrix • Portfolio planning method that evaluates a company’s SBUs in terms of its market growth rate and relative market share. RelativeMarketShare SBUstrengthinthemarket High Low MarketGrowthRate High Star Question Mark Marketattractiveness Need heavy investments to Decide which should be built • • finance rapid growth into stars or phased out • Build • Build, harvest or divest Low Cash Cow Dog • Successful • May generate enough cash to • Produce lots of cash that the maintain themselves but isn’t company uses to pay its bills guaranteed to be large sources and support other SBUs of cash • Harvest or hold • Harvest or divest Firm’sOptions Build Harvest • Increase market share •Increase S-T cash flow • Question mark and stars •Weak cash cows, question marks and dogs Hold Divest • Preserve market share •Sell or liquidate • Cash cows •Question mark and dogs • Limitations • Difficult, time-consuming and expensive • Provide little advice for future planning 2. Shape the future portfolio by developing strategies for growth and downsizing. • Product/market expansion grid • A portfolio-planning tool for identifying company growth opp. through market penetration, market development, product development, or diversification. ExistingP
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