CHAPTER 1: Marketing and the Concept of Planning and Strategy 157 PART VII TRANSPARENCY MASTERS Chapter Marketing and the Concept of Planning and Strategy A Concept of Planning Definition of Planning (TM 1-1) Importance of Business Planning (TM 1-2) B Concept of Strategy Definition of Strategy (TM 1-3) Importance of Strategy (TM 1-4) C Concepts of Strategic Planning Definition of Strategic Plan (TM 1-5) Steps to Make Strategic Planning Effective (TM 1-6) Scorecard for Measuring Strategic Planning Effort (TM 1-7) Strategic Planning: Emerging Perspectives (TM 1-8) D SBUs What is an SBU? (TM 1-9) Creation of SBUs (TM 1-0) Characteristics of a Viable SBU (TM 1-11) 158 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1-1 DEFINITION OF PLANNING A process directed toward making today’s decisions with tomorrow in mind and a means of preparing for future decisions so that they may be made rapidly, economically, and with as little disruption to the business as possible CHAPTER 1: Marketing and the Concept of Planning and Strategy 159 1-2 IMPORTANCE OF BUSINESS PLANNING • Leads to better standing for organization • Helps organization progress in ways management considers suitable • Helps manager think, decide, and act more effectively • Helps keep organization flexible • Stimulates cooperative, integrated, enthusiastic approach to problems • Indicates how to evaluate progress toward planned objectives • Leads to socially and economically useful results 160 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1-3 DEFINITION OF STRATEGY Strategy is a pattern of major objectives, purposes, or goals and essential policies and plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be CHAPTER 1: Marketing and the Concept of Planning and Strategy 161 1-4 IMPORTANCE OF STRATEGY Any organization needs strategy when: • Resources are finite • There is uncertainty about competitive strengths and behavior • Commitment of resources is irreversible • Decisions must be coordinated between far-flung places and over time • There is uncertainty about control of initiative 162 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1-5 DEFINITION OF STRATEGIC PLAN Strategic plan specifies the sequence and timing of steps that alter competitive relationships CHAPTER 1: Marketing and the Concept of Planning and Strategy 163 1-6 STEPS TO MAKE STRATEGIC PLANNING EFFECTIVE • Define goals clearly • Develop rational plans • Shape company into logical business units • Demonstrate willingness to compensate line managers on long-term achievements • Develop at corporate level capacity to evaluate and balance competing requests from business units for funding • Match shorter-term business unit goals to a long-term concept of the company’s evolution 164 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1-7 SCORECARD FOR MEASURING STRATEGIC PLANNING EFFORT • Is our planning really strategic? — Do we try to anticipate change or only project from the past? • Do our plans leave room to explore strategic alternatives? — or they confine us to conventional thinking? • Do we have time and incentive to investigate truly important things? — or we spend excessive planning time on trivia? • Have we ever seriously evaluated a new approach to an old market? — or are we locked into the status quo? • Do our plans critically document and examine strategic assumptions? — or we not really understand the implications of the plans we review? • Do we consistently make an attempt to examine consumer, competitor, and distributor responses to our programs? — or we assume that changes will not affect the relationships we have seen in the past? Source: Thomas P Hustad and Ted J Mitchell, “Creative Market Planning in a Partisan Environment,” Business Horizons, March–April, 1982, p 64 Copyright, 1982, by the Foundation for the School of Business at Indiana University Reprinted by permission CHAPTER 1: Marketing and the Concept of Planning and Strategy 165 1-8 STRATEGIC PLANNING: EMERGING PERSPECTIVES • Managing for competitive advantage • Viewing change as an opportunity • Managing through people • Shaping the strategically managed organization • Managing for focus and flexibility • Managing fit across all functions • Harnessing information 166 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1-9 WHAT IS AN SBU? An SBU is composed of a product or product lines with identifiable independence from other products or product lines in terms of competition, prices, substitutability of product, style/quality, and impact of product withdrawal It is around this configuration of products that a business strategy should be designed CHAPTER 1: Marketing and the Concept of Planning and Strategy 167 1-10 CREATION OF SBUs Strategic business units may be created by applying a set of criteria consisting of price, competitors, customer groups, and shared experience: a Price—To the extent that price changes in a product entail a review of the pricing policy of other products, these products may have a natural alliance b Competitors—If various products/markets of a company share the same group of competitors, they may be amalgamated into an SBU for the purpose of strategic planning c Customers—Products/markets sharing a common set of customers belong together d Shared Experience—Products/markets in different parts of the company having common R&D, manufacturing, and marketing components may be included in the same SBU 168 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1-11 CHARACTERISTICS OF A VIABLE SBU • Have a unique business mission, independent of other SBUs • Have a clearly definable set of competitors • Be able to carry out integrative planning relatively independent of other SBUs • Be able to manage resources in all areas • Be large enough to justify senior management attention, but small enough to serve as a useful focus for resource allocation [...]...CHAPTER 1: Marketing and the Concept of Planning and Strategy 16 7 1- 10 CREATION OF SBUs Strategic business units may be created by applying a set of criteria consisting of price, competitors, customer groups, and shared experience: a Price—To the extent that price changes in a product entail a review of the pricing policy of other products, these products may have a natural... products/markets of a company share the same group of competitors, they may be amalgamated into an SBU for the purpose of strategic planning c Customers—Products/markets sharing a common set of customers belong together d Shared Experience—Products/markets in different parts of the company having common R&D, manufacturing, and marketing components may be included in the same SBU 16 8 CHAPTER 1: Marketing and the Concept. .. components may be included in the same SBU 16 8 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1- 11 CHARACTERISTICS OF A VIABLE SBU • Have a unique business mission, independent of other SBUs • Have a clearly definable set of competitors • Be able to carry out integrative planning relatively independent of other SBUs • Be able to manage resources in all areas • Be large enough to justify ... different parts of the company having common R&D, manufacturing, and marketing components may be included in the same SBU 16 8 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1- 11 CHARACTERISTICS... socially and economically useful results 16 0 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1- 3 DEFINITION OF STRATEGY Strategy is a pattern of major objectives, purposes, or goals and. . .15 8 CHAPTER 1: Marketing and the Concept of Planning and Strategy 1- 1 DEFINITION OF PLANNING A process directed toward making today’s decisions with tomorrow in mind and a means of preparing