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MGMA01H3 (184)
Chapter 2

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University of Toronto Scarborough
Management (MGM)
Tarun Dewan

Strategic planning: process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities Companies usually prepare annual plan, long range plans and strategic plans Strategic planning process: Defining the company mission – Setting company objectives and goals – designing the business portfolio – planning, marketing and other function strategies Defining the mission Questions asked: what is our business? Who is the customer? What do consumers value? What should our business be? The answer to them is the mission statement Mission statement: statement of the organization’s purpose – what it wants to accomplish in the larger environment It acts as an invisible hand to guide people in an organization Should be market oriented and in terms of satisfying consumer needs It should NOT be stated as making more sales or profits Setting company objectives and goals Company must turn mission into detailed supporting objectives for each level of mgmt Managers must have objectives and they will be responsible for reaching them Marketing strategies and programs must be developed to support these marketing objectives and must be defined in detail. Eg: increasing promotion may require more advertising and this needs to be spelled out so the mission is translated into a set of objectives Designing the business portfolio Business portfolio: the collection of businesses and products that make up the company. The best portfolio is that that fits the company’s strengths and weaknesses. The two steps in business portfolio planning: 1) Analyzing the current business portfolio Management does a portfolio analysis: the process by which management evaluates the products and businesses that make the company. Companies use the BCG matrix or the growth-share matrix to determine the attractiveness and strength of the strategic business unit (SBU). It defines 4 types of SBUs: Stars: high growth and high share; require high investments & they eventually slow growth and turn into cash cows Cash cows: low growth, high share; less investment and produce a lot of cash that the company can use Question marks: low share, high growth; require lots of cash to hold their share; mgmt needs to decide which need to be turned into stars and which should be cut out Dogs: low growth, low share; generate cash to maintain themselves but do not promise large amounts of cash 2) Developing strategies for growth/downsizing Product/market expansion grid is a portfolio planning tool for identifying company growth opportunities through: Market penetration: increasing sales of current products to current market segments without changing product (timmies opening a store in hospitals/universities, building double
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