Strategic Planning is the process of developing & maintaining a strategic fit between the organisations goals & capabilities & its changing market opportunities. Each firm must select a game plan that makes most sense to its specific situation, opportunities, objectives & resources (e.g. P&G has advertising $$$’s) it is essential for long run survival & growth. Strategic Planning guides Marketing Strategy & needs to be customer focused; it sets the stage for all planning within the firm.
Strategic Plan - Adapting the firm to take advantage of opportunities in its constantly changing environment.
Annual/Long-Range Plans - Deals with the firms current businesses & how to keep them going
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Both the corporation & its SBU’s have missions & objectives. An SBU can be an industry or geographic division. The best business portfolio is the one that best fits the firm’s strengths & weaknesses & with the opportunities in the environment. Portfolio Analysis comprises of 2 steps:
Analyse current business portfolio (fund profitable SBU’s, divest weaker) – support core competencies
BCG Growth – Share Matrix analysis tool
Shape future business portfolio by developing strategies for growth & downsizing
Stars require heavy investment to fund growth but will turn into Cash Cows which are established low growth businesses that need little investment & produce a lot of cash to support other SBU’s. Question Marks require heavy investment to maintain market share, can be built into stars or phased out. Dogs won’t generate much cash & are poor businesses. QM – S – CC – D (life cycle) SBU’s need to be classified & their futures must be determined. The company then can choose whether to:
Invest to build its share
Invest just enough to hold its share
Harvest by milking short term cash flow regardless of long term effects.
Divest by selling it or phasing it out
BCG Matrix & other centralised approaches can be costly, time consuming & difficult to implement. They help classify...