Pp chap006
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1. The document discusses key elements of a strategic plan including determining the product market, level of commitment to resources, and objectives and plans for each functional area. 2. It also outlines the strategic planning process including collecting data, analyzing the situation, developing objectives and strategies, and measuring progress toward goals. 3. Finally, it provides examples of strategic planning tools like the wants-gets grid, conceptual map, value chain analysis, five forces of competition, and requisites for a learning organization.
Pp chap006
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- 2. Chapter Six Market Strategy McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
- 3. CRITICAL ELEMENTS IN A STRATEGIC PLAN Determining the (What markets do we 1 product market serve with what to serve products) Determining the (What level of 2 level of commitment investment in the to provide resources product market are we willing to make) Determining the (What are the 3 objectives and plans detailed aims and for each functional action plans) area 6-3
- 4. STRATEGY PROCESS Update MODEL historical data Collect current situation data Data analysis Develop objectives, strategies programs Develop financial documents Negotiate final plan Measure progress toward objectives Audit 6-4
- 5. 1. Define 2. Develop 3. Define 4. Define Strategic Track 1 mission statement of vision goals planning operating foundation principles and values Environmental scanning Strategy development 5. Define planning 6. Define 7. Define 8. Select Business Track 2 assumptions & total leadership segments strategy implications: market & requirements, and define Develop consensus most assess long-term corporate re: environment attractive strengths & & segment (customer/market, segments weaknesses in strategy competition, attractive suppliers, etc.) segments Gap analysis Strategy integration and capability development 9. Define capability 10. Formulate 11. Appraise, 12. Modify goals Strategy Track 3 gaps by assessing strategies test & if required, integration strengths/ that yield reconcile set capability weaknesses against competitive strategy functional development current capabilities advantage with and & specific functional business competitors in selected segments plans/ objectives needs 6-5
- 6. WANTS-GETS GRID HIGH PERFORMANCE Assistance Consistent product in cost control quality and appearance OVERACHIEVEMENT Reliable delivery Sales support UNDERACHIEVEMENT Fast order cycle Access to top Lead management generation HIGH IMPORTANCE 6-6
- 7. CONCEPTUAL MAP The Business to Business Marketplace--Now Percent of all products Pure Highly Commodity Customized The Business to Business Marketplace--Future Percent of all products Pure Highly Commodity Customized 6-7
- 8. VALUE CHAIN ANALYSIS Share of user $ Manufacturers Specialty Dealers Users 2000 2005 1 wholesalers 120 150 300 40% 50% Manufacturers Distributors Users 60% 50% 2 100% 100% 101 130 200 Total spending by users $10mm $15mm 6-8
- 9. FIVE FORCES OF COMPETITION Threat of substitutes Bargaining Struggles Bargaining power of between power of suppliers industry rivals customers Threat of potential entrants 6-9
- 10. Vision for disruption Identifying and creating oppor- tunities for temporary advantage through understanding •Stakeholder satisfaction •strategic soothsaying Directed at identifying new ways to serve existing customers better or new customers that no one else serves now Tactics Capability for disruption for disruption Market Seizing initiative to gain disruption Sustaining the momentum by advantage by developing flexible capacities for: •Shifting the rules •Speed •Signaling •Surprise •Simultaneous & sequential strategic thrusts that can be applied across with actions that shape, mold, many actions to build a or influence the direction of series of temporary nature of the competitors’ advantageous responses 6-10
- 11. Arena 1 Arena 2 Arena 3 Arena 4 Cost & Quality Timing & know-how Strongholds Deep pockets Disrupt Cat’s strategic strengths Outmaneuver Cat’s strengths (“Encircle Cat) Boost Lower Timing Know-how Geographic Channels Komatsu quality cost Rolls out Aggressive Komatsu Komatsu builds one R&D and moves moves to resources, product new product out of direct sales, new plants at a time program Japanese dealers, and user stronghold to then alliances to Asia, Europe, regional gain South America, centers strengths and lastly North America initially Erodes Cat’s Picks off Undermines Erodes Maneuvers Erodes premium price, Cat’s full Cat’s Cat’s World around Cat’s deep global volume, line one Advantage Dominance Cat’s strong pockets low costs by one On product One place dealer innovation at a time network 6-11
- 12. REQUISITES FOR THE LEARNING ORGANIZATION Visionary Target & Creating & X X Information X X Execution leadership trajectory systems striving 6-12