Chapter 2 Textbook Summary.docx

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2320A/B
Professor
Kevin Thompson
Semester
Winter

Description
Chapter 2  Strategic planning: the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities o Sets the stage for the rest of the planning in the firm  At the corporate level, the company stats the strategic planning process by defining its overall purpose and mission  Marketing planning occurs at the business-unit, profit, and market levels  Mission statement: statement of the organization’s purpose – what it wants to accomplish in the larger environment o Acts as an invisible hand o Firms with well crafted mission statements have better organizational and financial performance o Should be market oriented and defined in terms of satisfying basic customer needs  Corporate level o Defining the company mission o Setting company objectives and goals o Designing the business portfolio  Business unit, product, and market level o Planning marketing and other functional strategies  Product oriented vs. market oriented mission statements  Companies need to turn its mission into detailed supporting objectives for each level of management  Business portfolio: the collection of businesses and products that make up the company o Best is the one that best fits the company’s strengths and weaknesses to opportunities in the environment o Planning takes two steps:  The company must analyze its current business portfolio and decide which businesses should receive more, less, or no investment  It must shape the future portfolio by developing strategies for growth and downsizing  Portfolio analysis: management evaluates the products and businesses that make up the company o First step is the identify the key businesses that make up the company  strategic business units (SBUs): company division, product line within a division, single product or brand o Next assess the attractiveness of the various SBUs and decide how much support each deserves o The purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment o Evaluate SBUs on two dimensions  Attractiveness on the market or industry  Position in that market or industry  Boston Consulting Group (BCG) uses growth share matrix: o Vertical axis: market growth rate o Horizontal axis: relative market share o Stars, question marks, cash cow, dog o As time passes they change position o Can be difficult, time consuming, and costly to implement o Focus on current not future  Companies objective must be to manage profitable growth  One useful device for identifying growth opportunities is product/market expansion grid o Existing products/new products vs. existing markets/new markets  Market penetration: a strategy for company growth by increasing sales of current products to current market segments without changing the product  Market development: identifying and developing new markets for its current products (demographic markets)  Product development: offering modified or new products to current markets  Diversification: start up or buy businesses outside of its current products and markets  Companies must develop not only strategies for growing their business portfolios, but also strategies for downsizing them o E.g. if the market environment changes, making some products or markets less profitable, products or business units simply age or die  The company’s strategic plan establishes what kind of businesses the company will operate and its objectives for each  The major functional departments in each must work together to accomplish strategic objectives  Marketing provides a guiding philosophy – the marketing concept – that suggests that company strategy should revolve around building profitable relationships with important consumer  Marketing provides inputs to strategic planners by helping to identify attractive market opportunities  Within individual business units, marketing designs strategies for reaching the units objectives  In addition to CRM, marketers must also practice partner relationship management o Work closely with partners to form an effective value chain o Form a competitively superior value delivery network  Each company department can be thought of as a link in the company’s value chain  Value chain: the series of departments that carry out value-creating activities to design, product, market, deliver, and support a firm’s products o A company’s value chain is only as st
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