CHAPTER 2

Strategic Market Management

If you do not have a Competitive Advantage, dont Compete.

Jack Welch, GE

Strategic Market Management (SMM)

A strategic decision involves the creation, change, or retention of a strategy. The cost of altering a wrong decision may be so high. Normally a strategic decision has a time frame>one year, sometimes decades are involved The role of SMM is not only selecting among alternatives, but identification of alternatives as well.

The External and Internal Analysis

External Analysis
The examination of the relevant elements external to the company Analysis should be purposeful, focussing on the identification of opportunities, threats, trends, strategic uncertainties and choices Output is identification and understanding of opportunities and threats Usually at business unit level

External Analysis
Customer Analysis Competitors Analysis
Performance Image and personality Current and past strategy Culture Strengths and weaknesses

External Analysis
Market Analysis

Size Growth prospects Market profitability Cost structures Distribution channels Market trends Key success factors

Environmental Analysis

Internal Analysis
Performance Analysis Product Portfolio Analysis Determinants of strategic options
Strategy review Strategic problems Organizational capabilities and constraints Financial resources and constraints Strengths and weakness

Creating a Vision for the Business

A business vision can play several roles for many decades First, it can suggest strategic paths for the business Second, it can help to perpetuate the core of the business Third, it can inspire and provide a purpose to the people in the organization.

Creating a Vision for the Business

Core Values;
Usually three to five Timeless and passionately held guiding principles

Core Purpose
Which should last for at least 100 years Beyond current product and services

BHAGs (big, hairy, audacious goals)

Creating a Vision for the Business

Core values;
1.

Delivering consumer value, breakthrough innovation, and building strong brands (Procter & Gamble).

Core Purpose
1. 2. 3.

To make technical contributions for the advancement and welfare of humanity (Hewlett-Packard) Preserve and improve human life (Merck). To make people happy (Walt Disney). One approach to finding a core business purpose is to ask five whys Why is that important?

Creating a Vision for the Business

Core Values Business Vision

Core Purpose

BHAGs

Strategy Identification and Selection

Product-Market Investment Strategies
Product definition
Market definition Vertical integration

Growth directions
Investment strategies Functional area strategies Bases of SCA Strategic positioning

Product-Market Growth Directions

Current Products New Products

Current Markets

Market Penetration

Product Expansion

New Markets

Market Expansion

Diversification

Selecting Among Strategic Alternatives

The five useful general areas selecting

among alternatives
Consider scenarios Pursue a SCA Be consistent with organizational vision and objectives Be feasible

Consider the relationship to other firm strategies

Implementation Strategy review