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
– 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.
– 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
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
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.