What is a Strategy?

A strategy is the definition of a business.

It specifies what is to be done and how.
It specifies the product / service to be provided and the
segments of the market to which that product / service is
directed.
It defines the channels of distribution to the market
segments and
the kind of production processes that are required.
Finally, it defines how the necessary capital will be provided
and
the kinds of people and organizational structure needed.
MM1 Sec A &C

Dr. Reeti Agarwal

Strategic Planning

Strategic planning is the managerial

process of developing and
maintaining a viable fit between the
organizations objective, skills, and
resources and its changing
opportunities.

The aim of strategic planning is to

shape the companys businesses,
products, services, and messages so
that they achieve targeted profits
and growth. Dr. Reeti Agarwal
MM1 Sec A &C

Steps in Strategic
Planning
Corporate
level
Defining
the
company
mission

Setting
company
objectives
and goals

Designing
the
business
portfolio

Like the marketing

strategy, broad company
strategy must be
customer focused
MM1 Sec A &C

Business
unit,
product and
market
level
Planning
marketing
and other
functional
strategies

Companywide
strategic planning
guides marketing
strategy and planning
Dr. Reeti Agarwal

Product Orientation vs. Market

Orientation
Company

Product

Market

Xerox

We make copying
equipment

We improve
office
productivity

Columbia
Pictures

We make movies

We entertain
people

Encyclopedi
a Britannica

We sell encyclopedias

We distribute
information

Carrier

We make air
conditioners and
furnaces

We provide
climate control
inside homes

MM1 Sec A &C

Dr. Reeti Agarwal

Establishing Strategic
Business Units (SBU)

Most companies operate

several businesses.
Large companies normally
manage quite different
businesses, each requiring
its own strategy.

MM1 Sec A &C

Dr. Reeti Agarwal

An SBU has 3 characteristics:

It is a single business or collection of

related businesses that can be planned
separately from the rest of the
company.
It has its own set of competitors
It has a manager who is responsible for
strategic planning and profit
performance and who controls most of
the factors affecting profit.

MM1 Sec A &C

Dr. Reeti Agarwal

Assessing businesss strength

The Boston Consulting Group (BCG)
matrix

MM1 Sec A &C

Dr. Reeti Agarwal

Assessing Growth
Opportunities

MM1 Sec A &C

Dr. Reeti Agarwal

Planning new businesses,

downsizing older
businesses.

Intensive growth opportunities- further growth

within current business (product-market expansion grid)

Integrative growth opportunities

Diversification growth opportunities

Backward
Forward
Horizontal
Concentric diversification- new products, same
technology
Horizontal diversification- related products, different
technology
Conglomerate diversification- new products, new
technology

Downsizing
Businesses
MM1 Sec A &C and Divesting
Dr. Reeti Older
Agarwal

The Intensive Growth Strategies:

Ansoffs Product-Market
Expansion Grid

MM1 Sec A &C

Dr. Reeti Agarwal

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Strategic
Competitive Analysis

Steps in analyzing
competitors

Identifying the
companys
competitors

Assessing
competitors
strengths
and weaknesses
Reeti Agarwal

Determining
competitor's
objectives

Estimating
competitors
reaction

Identifying
competitor's
strategy

Selecting
competitors
to attack
and avoid
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Identifying Competitors

Industry concept of competition

Number of sellers and degree of differentiation

Pure Monopoly- (local electricity, Gas)

Oligopoly- (standardized- oil, steel) (differentiatedautos)
Monopolistic Competition- (restaurants, beauty
shops)
Pure Competition- (commodity market)

Entry, mobility and exit barriers

Cost structure
Degree of vertical integration
Degree of globalization
Reeti Agarwal

13

Market concept of
competition
Real / Tropicana Fruit
Juices
Tea

Mineral
Water

Thums
Up

Direct
Competition

Nariyal
Pani
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Coke

Rasna

Pepsi
Mirinda

Indirect
Competitio
n
7UP

Dew
Coffee

Home Made
Drinks like
Neembu Pani

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Assessing Competitors

Objectives
Strategies

Strategic group

Strengths and weaknesses

Arthur D. Little

Dominant
Strong
Favorable
Tenable
Weak
Nonviable

Reaction patterns
Reeti Agarwal

15

Strategic Group

A STRATEGIC GROUP consists of

those rival firms with similar
competitive approaches &
positions in an industry

A STRATEGIC GROUP MAP

displays different competitive
positions that rival firms occupy
Reeti Agarwal

16

Firms in same strategic

group have one or more
competitive characteristics
in common
Sell in same price/quality range
Cover same geographic areas
Be vertically integrated to same degree
Have comparable product line breadth
Emphasize same types of distribution
channels
Offer buyers similar services
Use identical technological approaches

Reeti Agarwal

17

Three variables to be monitored

when analyzing competition

Share of market

Share of mind- name the first company

that comes to mind in this industry

Share of heart- name the company

from which you would prefer to buy the
product

Reeti Agarwal

18

Selecting Competitors

Strong versus weak

Close versus distant

Good versus Bad

Reeti Agarwal

19

Market Leader
40%

Market
Challenger
30%

Competitive
Positions

Market Follower
20%

10%
Market Nichers
Reeti Agarwal

20

Competitive Strategies
for Market Leaders

Expanding the total demand

New customers/users

New Uses (honey, Cadburys Dairy Milk, Vaseline,

Emami Boroplus, Rooafza)
More usage

Market- penetration
New-market segment strategy
Geographical-expansion strategy

Level (mosquito mats)

Quantity (shampoo)
Frequency (toothpaste)
Planned Obsolescence (Toothbrush)

Protect current market

Exapanding Market Share
Reeti Agarwal

21

Market-challenger
strategies

It can attack the market leader

It can attack firms of its own size that

are not doing the job and are
underfinanced

It can attack small local and regional

firms
Reeti Agarwal

22

Market- Follower
Strategies

Counterfeiter- black market,

duplicates
Cloner- Kurmure, Takme, Monti
Charlie, Keller Jeans (Natraj,
Uncle Chips)
Imitator- similar policy
Adapter- improvement in
leaders product

Reeti Agarwal

23

Market-Nicher
Strategies

End-user specialist
Customer-size specialist
Specific-customer specialist
Geographic specialist
Quality-price specialist
Service specialist
Channel specialist
Reeti Agarwal

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