Strategic Planning--How do organizations determine their overall goals?

DEFINED: Strategic planning determines the overall goals of the business and the steps it will take to achieve them.

Business planning can be categorized into two different levels:

·Strategic planning is typically completed by the top management of a business as opposed to tactical planning that

is typically done within the various functions within a business.

·Tactical planning is the process of developing actions for r

various functions within a business to support implementing a business's strategic plan. The strategic planning process includes the following four critical elements:

·Establish the business mission.

·Identify the business vision.

·Define the business objectives.

·Develop the business portfolio.

A business mission is a statement that identifies the purpose of a business and what makes that business different from others.The mission statement should be neither trite nor verbose. The scope of the mission should not be so broad that any strategy could be developed within that scope.It should also not be so specific that flexibility to take advantage of market opportunities is restricted.The mission should at least reflect the compelling benefit that a business offers to consumers. Starbuck's business mission is the following: "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”

A business vision is a statement in a strategic plan that identifies an idealized picture of a future state a business is aiming to achieve. A business vision complements a mission statement by providing a description of the end state if the strategic a plan is implemented successfully.

After establishing a business mission and business vision, to translate the mission and vision throughout a business, objectives must be developed. A business objective is something a business is attempting to achieve in support of an overarching strategy. Successful objectives include the following:

·Specific—Does the objective refer to a unique event?

·Measurable—Can the objective's achievement be deter-

mined using established metrics?

·Achievable—Is the objective possible,given business

constraints?

Relevant—Will the objective support a desired business

strategy?

·Time-bound—Is there a duration for attaining the objective?

Objectives can be established to address many different requirements, including financial requirements such as sales revenue and profitability, operational requirements such as productivity and efficiency,and marketing requirements such as

market share and brand awareness. Examples of some objectives include“to increase sales by 25%”and to expand retail locations to every country in Europe.”

Strategic Planning

There are varieties of tools that can assist businesses to complete their strategic planning processes.These range from traditional to contemporary models. A classic model for conducting a portfolio analysis is the Boston Consulting Group(BCG) Growth-market matrix.The BCG matrix (see Figure 3.1) assists in identifying which products or services should receive more or less investment,and which market sectors could benefit from more or fewer product or service offerings. The BCG matrix includes two variables: market share on the x-axis and market growth rate on they-axis. The ranges, typically referred to as high and low, should be set relative to economic realities,such as the rate of inflation, as well as the characteristics of the market sectors, such as the number of competitors and leading market share, being analyzed.

Stars represent products or services with high growth and high market share.Placement in this category indicates tremendous strategic value to a business. The number of consumers and the potential for significant profits in this sector require strong consideration for investment of resources. Money generated from this sector can support products or services in other sectors. An important strategy for Stars is to ensure that the products or services remain relevant to consumers.

Cash Cows are products or services with high market share

and low growth opportunities. Stars often become Cash Cows

When competitors enter their market and growth slows. Cash

Cows do not require the level of investment that Stars require,

because there is limited potential to grow. Instead, the current

position is managed to generate money to support other aspects

of a business.

Question Marks are products or services with low relative market share in a sector with high growth. While there is potential in this sector, a significant financial investment is required to take advantage of that potential. Question Marks could evolve into Stars, but they could also drain resources from other potential investments within the portfolio.

Dogs are products or services with low relative market share in a low growth sector.Although there is limited potential, there is an opportunity for a product or service to maintain its position. Little or no additional investment is warranted unless products or services in this sector are connected to products or services in a higher potential sector. Strategies for offerings in this sector are often selling this part of the portfolio or reducing financial support while removing cash and then divesting.

The BCG matrix has limitations, including the consideration

of only two dimensions: market share and market growth rate.

High market share does not guarantee financial profits, and limited market share does not guarantee poor financial results.

Growth is not the only indicator of market attractiveness, and

investment or divestment decisions made solely using the BCG

matrix may be shortsighted.

 

3.3 Marketing Planning

DEFINED Marketing planning includes those activities

devoted to accomplishing marketing objectives.

A marketing objective is something that a marketing function is attempting to achieve in support of a strategic business plan. A marketing function can select a wide range of possible objectives, including building awareness of a product or service. Increasing sales,increasing market share,and reducing resistance to a product or service.

Examples of marketing objective include the following:

·Increase sales of high-end navigation systems among owners

of European luxury cars by 10% in one year.This can be measured through analyzing annual sales data.

·Increase market share of a specific brand of office furniture within the business market by 5% in six months. This can be measured through industry data published by an office furniture trade association.

·Create awarenes of a new wetsuit line among high school swimmers.This can be measured through a questionnaire given to high school swimmers.