Corporate Strategic Planning – Overview (Philip Kotler Summary)

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CORPORATE STRATEGIC PLANNING: ( Corporate/ Divisional).

Activities to be undertaken

Define corporate mission.

– Establishing SBU’s.

– Assigning resources to each SBU.

– Planning new business.

 

Defining Corporate Mission:

–          An organization exists to accomplish something. This is its specific mission/ purpose.

–          Company’s mission shaped by

– History (of Aims/ policies/ Achievements).

– Current preferences of owners/ management.

– Market environment.

– Resources (Missionshould be achievable).

– Distinctive competencies (company should base its mission on what it does

best).

– Fundamentals questions to be asked;

– What is our business?

– Who is the customer?

– What is the value to customer?

– What will/ should our business be?

– Good mission statement has three characteristic.

– Focus on limited number of goods.

– Stress policies/ values that company wants to honour.

– Define major competitive scopes within which the company would operate.

eg.- Bajaj Auto Limited.

– Focuses on 2- wheeler & 3- wheeler (limited goods).

– Policy is “whichever product we make must be cheapest in that segment” .

Competitive scopes include  – Industry scope

– Product/ Application scope

– Competence scope

– Market segment scope

– Vertical scope

– Geographical scope.

Establishing SBU’s:

–          Companies often define their business in terms of product. e.g. – Auto business.

–          Market definition of business may be better i.e., business viewed as customer satisfying process rather than goods producing process.

–          Business may be defined using three dimension

– Customer group.

– Customer needs

– Technology.

Eg.- small software company developing application software for co-operative banks.

Customer group          –           Co-operative bank.

Customer need            –           Transaction processing.

Technology                 –           Application Software platform.

This company may expand after sometime. For this it could redefine any of the dimensions of current business unit.

To Assign Resources to each SBU’s:

–          Purpose of identifying each SBU is to develop separate strategies & assign appropriate resources.

–          Business portfolio may include

– Future winners

– Past champions

– Current bread winners.

–     To go beyond impressions, one needs analytical tools to classify each SBU based on its

profit  potential.

Analytical tools could be:

– BCG Model (Growth Share matrix).

– GE    Model (Multifactor Portfolio Matrix).

Planning New Business:

–          Company’s plans for existing business allow it to project total sales/ profits over time period.

–          If projected sales & profits are less than what corporate/ management desires, there is a gap in the strategic plan.

–          This gap could be filled by developing/ acquiring new business.

–          Options to fill strategic planning gap could be

  • Intensive growth opportunities.
  • Integrative growth opportunities
  • Diversification growth opportunities.

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