chap006 market strategy
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McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.
Chapter 6
Market Strategy
ELEMENTS OFBUSINESS STRATEGY
Determining the product marketto serve
(What markets do we serve with what products)
Determining the level of commitment to provide resources
(What level of investment in the product market are we willing to make)
Determining the objectives and plans for each functional area
(What are the detailed aims and action plans)
1
3
4
Determine partner relationship commitments
(How do agreements impact choices)
2
6-3
CRITICAL ELEMENTS IN A STRATEGIC PLAN
Determining the product marketto serve
(What markets do we serve with what products)
Determining the level of commitment to provide resources
(What level of investment in the product market are we willing to make)
Determining the objectives and plans for each functional area
(What are the detailed aims and action plans)
1
2
3
6-4
STRATEGY PROCESS MODEL 1
EXTERNAL ANALYSIS
SELF (INTERNAL ANALYSIS
Evaluate opportunities, threats and strategic
questions
Evaluate strengths, weaknesses, problems, constraints, questions
STRATEGY IDENTIFICATIONAND SELECTION
Exhibit 6-2
6-5
STRATEGY PROCESS MODEL 2
Negotiate final plan
Measure progress toward objectives
Audit
Develop financial documents
Update historical data
Collect current situation data
Data analysis
Develop objectives, strategies, programs
Exhibit 6-2
6-6
Strategy integration and capability developmentGap analysis
Environmental scanning Strategy development
1. Define mission
2. Develop statement of operating principles and values
3. Define vision
4. Define goals
Strategicplanning foundation
Track 1
Track 25. Define planning
assumptions & implications: Develop consensus re: environment (customer/market, competition, suppliers, etc.)
6. Define total market & most attractive segments
7. Defineleadership requirements, assess long-term strengths & weaknesses in attractive segments
8. Select segments and define corporate & segment strategy
Business strategy
Track 39. Define capability
gaps by assessing strengths/weaknesses against current capabilities & specific competitors in selected segments
10. Formulate strategies that yield competitive advantage
11. Appraise, test & reconcile strategy with functional plans/needs
12. Modify goals if required, set functional and business objectives
Strategy integration capability development
STRATEGY PROCESS MODEL 3
Exhibit 6-26-7
HIGH IMPORTANCE
Assistancein cost control
OVERACHIEVEMENT
UNDERACHIEVEMENT
Consistent product quality and appearanceReliable
delivery
Sales support
Fast order cycle
Leadgeneration
Access to top management
HIGH PERFORMANCE
WANTS-GETS GRID
Exhibit 6-56-8
CONCEPTUAL MAP
Exhibit 6-6
Reputationfor
Excellence
NOVUS
MAVUUS
CLARKE
T3
Project manager’scompetency
Hi
Lo
Bad Good
6-9
Share of user $
$15mm$10mmTotal spending by users
100%100%2
50%60%Users
200
Distributors
130
Manufacturers
101
50%40%
1
20052000Users
300
Dealers
150
Specialty
Wholesalers
120
Manufacturers
100
VALUE CHAIN ANALYSIS
Exhibit 6-7
6-10
Threat of substitutes
Bargaining power of suppliers
Struggles between
industry rivals
Bargaining power of
customers
Threat of potential entrants
FIVE FORCES OF COMPETITION
Exhibit 6-8
6-11
BARRIERS TO ENTERING A MARKET
• PRODUCT DIFFERENTIATION
• ECONOMIES OF SCALE
• CAPITAL REQUIREMENTS
• ACCESS TO DISTRIBUTION CHANNELS
• COST DISADVANTAGES UNRELATED TO SIZE
• GOVERNMENT POLICY
Exhibit 6-9
6-12
ACTIONS TO MEET COMPETITIVE CHALLENGES
• CHOOSE ITS COMPETITIVE BATTLEGROUND JUDICIOUSLY
• CHANGE THE COMPETITIVE STRUCTURE OF THE INDUSTRY
• ANTICIPATE AND EMPLOY CHANGE
6-13
Vision for disruption
Sustaining the momentum bydeveloping flexible capacities for:
Seizing initiative to gainadvantage by •Shifting the rules•Signaling•Simultaneous & sequential strategic thrusts
Marketdisruption
Identifying and creating oppor-tunities for temporary advantage
through understanding
Directed at identifying new waysto serve existing customers
better or new customersthat no one else
serves nowCapability
for disruption
that can be applied acrossmany actions to build a
series of temporaryadvantageous
with actions that shape, mold,or influence the direction onnature of the competitors’
responses
Tacticsfor disruption
•Stakeholder satisfaction•Strategic soothsaying
• Speed• Surprise
Exhibit 6-10
6-14
Disrupt Cat’s strategic strengths Outmaneuver Cat’s strengths (“Encircle” Cat)
Boost
quality
Lower
cost
Timing
Rolls out
one
product
at a time
Geographic
Komatsu moves out of Japanese
stronghold to
Asia, Europe,
South America,
and lastly
North America
Know-how
AggressiveR&D andnew productprogram
Channels
Komatsu
moves to
direct sales,
dealers, then
regional
centers
Komatsu
builds
resources,
new plants
and user
alliances to
Gain
strengths
initially
Erodes Cat’s
premium price,
global volume,
low costs
Picks off
Cat’s full
line one
by one
Undermines
Cat’s
advantage
on product
innovation
Erodes
Cat’s World
dominance
one place
at a time
Maneuvers
around
Cat’s strong
dealer
network
Erodes
Cat’s deep
pockets
Arena 1Cost & Quality
Arena 2Timing & Know-how
Arena 3Strongholds
Arena 4Deep Pockets
KOMATSUV CATERPILLAR
From the Field: 6-16-15
MARKET ORIENTATION ELEMENTS
BEING SYSTEMATIC IN:
1. Gathering of information on customers and competitors
2. Analyzing information to develop market knowledge
3. Using this knowledge to guide strategy
6-16
PAYOFFS FROM A MARKET ORIENTATION
A MARKET ORIENTATION COMPANY IS:
1. BETTER AT FITTING NEEDS OF CUSTOMERS
2. MORE DIFFICULT FOR COMPETITORS TO ASSESS
3. APT TO BE UNIQUE
6-17
REQUISITES FOR THE LEARNING ORGANIZATION
xxxxVisionary
leadership
Information
systemsExecution
Creating &
striving
Target &
trajectory
Exhibit 6-13
6-18