Chapter 2 – Strategic planning and the marketing environment

Business planning
an ongoing process of making decisions that guide that company both in the short and long term/
The 3 levels of business planning
1. Strategic Planning
2. Functional planning (marketing planning)
3. Operational Planning
Strategic planning
a managerial decision process that matches an organizations resources and capabilities to its market opportunities for long term growth and survival
Functional planning
a decision process that concentrates on developing detailed plans for strategies and tactics for the short term that support an organizations long term strategic plan
Operational Planning
A decision process the focuses on developing detailed plans for day to day activities that carry out an organizations functional plans.
Strategic Business Units (SBU’s)
individual units within the company that operates as a separate business having its own mission, objectives, competitors etc
Mission statement
a statement in an organisation strategic plan that describes the overall purpose of the organization and what is intends to achieve.
Internal Environment
The controllable elements inside an organisation and how it does things that influence operations
External environment
the uncontrollable elements outside an organisation that may affect its performance either way.
SWOT Analysis
analysis of an organisations strengths and weaknesses and opportunities and threats in its internal and external environment
PEST analysis
analysis of political…etc that can affect an organisation
PESTE analysis
PEST + Environment
The Steps in the Strategic Planning Process
1. Define the mission
2. Evaluate the internal and external environments
3. Set organisational or SBU objectives
4. Establish the Business portfolio
5. Develop growth strategies
Activities in “define the mission” stage of the strategic planning process
Mission Statement
Activities in the Evaluation of internal and external environments stage (strategic)
analysing environment using SWOT, PEST and PESTE analysis’
Activities in the setting organisational objectives stage (strategic)
translating mission into objectives that are SMART
Business portfolio
the group of different products or brands owned by an organisation and characterised by different income generating and growth capabilities
Portfolio Analysis
A tool for evaluating a company’s business mix and assessing the potential of its SBU’s
BCG Growth-Market Share Matrix
a portfolio analysis model developed by the Boston Consulting Group that assesses the potential of successful products to generate cash that the company can then use to invest in new products
Activities in the Establishing business portfolio stage (strategic)
Deciding how to best allocate resources using a portfolio analysis such as the BCG matrix and distinguishing markets as: stars, question marks,
cash cows and dogs
layout of BCG matrix
Stars [question marks
Cash cows[ Dogs
Activities in the development of growth strategies stage (strategic)
Decide how to create growth using the product-growth matrix. Then decide on a type of strategy from:
1. Market penetration
2. Market development
3. Product development
4. Diversification
Layout of the product-growth matrix
Market penetration [ product development
Market development [ diversification
Market penetration
Seek to increase sales of existing products to existing markets
Market development
Introduce existing products to new markets
Product Development
Create growth by selling new products in existing markets
Diversification
Emphasize both new products and new markets to achieve growth
The Steps in the Functional Planning Process
1. Perform a situation analysis
2. Set marketing objectives
3. Develop marketing strategies
4. Implement marketing strategies
5. Monitor and control marketing strategies.
Activities in the development of marketing strategies stage (functional)
develop actual marketing strategies by selecting a target market and developing marketing mix strategies including the 4 P’s. – product, place, price, promotion
factors of internal environment
the company’s technologies, facilities, financial stability, reputation, quality of products and its employee’s.
factors of external environment
overall economy, competition, technology, laws and trends in society an pop culture, the business cycle, inflation, incomes, competitive environment and demographics.