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AGLSTD1DRAFT/18.12.93

AUTOMATED GROUP LEARNING(AGL)

NO. 100 - BUSINESS STRATEGY - 1999

DAILY WORK PACK - PART I(Retained)

Copyright:AVM/RGAB 1993/4No copies of without written permission.

INTRODUCTION

WELCOME TO THE PROGRAM

1. Good morning. Welcome to AGL No. 100 Business Strategy - 1999. AGL - Automated group learning.

2. During the next two days you will achieve a rapid grasp of the basics of business strategy for EVERY level of the organization.

3. The AGL learning system represents many years of development and testing in thirty countries around the world, in several languages by thousands of participants. Their criticisms and suggestions have been incorporated into the program.

4. After two days learning with the AGL method you will understand and use the concepts of vision, mission, positioning and corporate strategy, and how to apply them to your organization; and you will retain the skills and knowledge accumulated for a long period.

5. While you may be used to traditional educational methods, you will be agreeably surprised by your learning results of the next two days. We will provide you with a controlled environment for learning.

6. It may seem strange for you to learn without an instructor, but be assured that we have structured the course to enable you to find the answers to all your questions in the learning materials provided.

7. Your course organizer is trained to run the program and to help you obtain the most benefit from the course. You will have to work hard, but you will learn a great deal, and to retain the knowledge. So now let us start with some abbreviations which follow ...

AGL - AUTOMATED GROUP LEARNINGIND - INDIVIDUAL

SG - SMALL GROUPCSG - COMBINED SMALL GROUPMG - MAIN GROUP

L - LECTURE D - DISCUSSION

LRT - LEARNING RECALL TAPE

*** - STOP! DO NOT LOOK PAST THIS PAGE UNTIL ASKED TO DO

PROGRAM - PART IVERSION A - 2 1/2 DAYS - STARTING IN THE MORNING

Activity Group Day I

INTRODUCTION:

1. Introduction IND 09.00 - 09.15SG (new)

2. Quiz IND 09.15 - 09.45SG

UNIT I:

3. STUDY: View and SG 09.45 - 10.30Vision Coffee

4. Lecture: MG 10.45 - 11.15

5. Case: IND 11.15 - 12.45Ciba-Geigy A-1 SG

CSG Lunch

6. Lecture MG 13.45 - 14.15Ciba Geigy A-1 CSG

UNIT II:

7. Study: Mission IND 14.15 - 15.15SG (new)

Tea8. Lecture MG 15.30 - 16.00

9. Case: IND 16.00 - 1700Ciba-Geigy A- 2 SG

Preparation forDay II IND 20.00 - 21.00

Day II

- Case CSG 0.90 - 09.45

10. Lecture MG 09.45 - 10.15CSG

Coffee11. Summary Lecture MG 10.15 - 11.15

PROGRAM - PART IVERSION B - 2 DAYS - STARTING IN THE MORNING

Activity Group Day I

INTRODUCTION:

1. Introduction IND 08.00 -08.30SG (new)

2. Quiz IND 08.30 - 09.00SG

UNIT I:

3. Study: View and IND 09.00 - 10.15Vision

4. Lecture MG 10.15 - 10.30SG

Coffee5. Case: IND 10.45 - 12.00

Ciba-Geigy A SGCSG

6. Lecture MG 12.00 - 12.30CSG

LunchUNIT II:

7. Study: Mission IND 13.30 - 14.45SG (new)

8. Lecture MG 14.45 - 15.00

9. Case: IND 15.00 - 15.45Ciba-Geigy A SG

Tea- Case CSG 16.00 - 16.45

10. Lecture MG 16.45 - 17.15CSG

11. Summary Lecture MG 17.15 - 18.00

Preparation for INDDay II SG 20.00 - 22,00

ASSIGNMENT 1.0 - INTRODUCTION (30 MINUTES)

1.1 SPECIFIC OBJECTIVES

The program is designed to provide managers with the opportunity to achieve a deeper understanding of the new business strategy concepts, terminology, techniques and statements.

This broadening of knowledge, skills and attitudes, will enable them to capitalise on new business opportunities and to accelerate their professional development.

The specific learning objectives are to:

a. Understand strategic language and concepts

b. Use the cycle of VMPA (Vision, Mission, Positioning and Action)

c. Develop confidence in analyzing strategic issues.

d. Relate strategic concepts to current organizational problems

e. Motivate further study in the future

The syllabus of the program includes: the VMPA concept, view and vision analysis, product/service market arenas, competitive advantage, corporate mission, positioning, segmentation, competitive strategy, product/market strategy and strategic implementation.

1.2 AUTOMATED GROUP LEARNING (AGL)

The AGL method is designed to achieve rapid individual learning using special material and the stimulus of group activity without a formal teaching. The groups use the material to find the answers to all problems and questions. The program provides the full cycle of pre-learning, learning and learning maintennce activity.

1.3 GROUP ARRANGEMENTS

The work will be done:

a. IND - Individually, orb. SG - Small Group (in small groups of four members which will

change daily), orc. CSG - Combined Small Group (two small groups together), ord. MG - Main Group (for short taped lectures on key learning points

with visual aids).

1.4 SG - SMALL GROUPS

Group names provided on name lists. Note the name of your SG and the names of the other members.

1.5 LEARNING MATERIALS

a. Retained by members

Notebook - for recording every key pointWorkpack for Day I with study notes, cases and exercises.Standard course diaryGlossary

b. Used by not retained by members:

Guide - with quiz, case solutions and key learning points

NOTE:

Please use your notebook. You receive all the materials in your SG. Please don't look ahead in the work pack until you are specifically asked to do so!

1.6 METHOD

Try to complete every task in the time allowed. A pattern oflearning methods will be used including:

a. Studyb. Case analysisc. Lecturesd. Quizzese. Learning patternsf. Exercises/minicasesg. Homework readingh. Learning Recall (LRT)

NOTE: There will be a flip chart in then room for you to record CONTINUALLY any suggestions for correcting the learning materials and improving the quality of the learning environment. This helps you to remove "Learning Blocks". Please use this facility to express your ideas ...

1.7 LEARNING PATTERNS

INSERT

1.8 INSTRUCTIONS (15 MINUTES)

a. Assemble in SG's to introduce yourself, indicate your past experience in finance and what you hope to contribute to and gain from the course.

b. Complete the registration sheet in the Daily Course Diary.

NOTE: Please check that you have a full set of learning materials now.

ASSIGNMENT 2.0 - QUIZ (45 MINUTES)

2.1 INSTRUCTIONS SMALL GROUP WORK

(a) Assemble in SG

(b) Answer the quiz of 60 questions; mark your answers a, b, c, or d with a clear "x" on the special form provided in the course diary

(c) Work as quickly as possible but don't guess - leave blanks

(d) Hand in your answer sheet to the Organizer who will mark it and give you a quantitative measure of your strategic knowledge at the start of the course

(e) Reassemble in MG when the bell rings

UNIT I - VIEW AND VISION

ASSIGNMENT 3.0 - VIEW AND VISION - STUDY (60 MINUTES)

3.1 INSTRUCTIONS - INDIVIDUAL/SG WORK

(a) Assemble in SG

(b) Read the lecture and discuss every issue in SG.

(c) Record the seven most significant issues on the flip chart provided.

(d) Reassemble in MG when the bell rings

NOTE:

Work very quickly. Please use your notebook to record key points and also MARK UP the Daily Work Pack as a LEARNING TOOL FOR YOUR SPECIAL NEEDS.

Don't look ahead in the workpack until you are specifically asked to do so!

ASSIGNMENT 4.0 - LECTURE ON VIEW AND VISION

4.1 METHOD

Read aloud, listen and respond verbally to any questions.

4.2 STRATEGIC QUESTIONS

a. Where are we going to? - Vision, mission, objectives?

b. What may stop us? - External constraints?

c. Are we any good anyway? - Corporate audit?

d. How to choose a strategy? - Portfolio of risk i.e. how confident do we need to be, that our predictions will be valid?

e. How to implement the strategy to ensure success? - How do we structure the company, motivate our colleagues and evaluate (control) progress?

4.3 CHALLENGES TO TOP MANAGEMENT

a. How to add value to the business? How to optimize performance now and for the future? How to meet the needs of the stakeholders - shareholders, staff, customers, suppliers, local government and the general public?

Note: All stakeholders want the company to achieve profitability, growth and survival, for a variety of different reasons i.e. cash flow, security, prestige, taxes, stability, quality, reliability, community economics, employment, welfare costs etc.

b. How to create and retain profitable customers?

c. How to recognize the benefits, costs and penalties of change in anticipatory, reactive and crisis change situations.

d. How to understand the structure of customer needs and identify NOW the critical five year concerns, because:

1. Technology alone no longer satisfies the customers; it is merely the entrance ticket to the game.

2. Every competitor usually has the same level of technology, and yet our company must distinguish itself.

3. Customer needs must be identified to ensure a quality in product/service/design which gets to the market as fast as possible.

4.4 THE VMPA CONCEPT OF CORPORATE STRATEGY

a. The VPMA concept for developing corporate strategy involves:

V - VISION derived from the CEO's initial PERSPECTIVE for the future, leads to comprehensive analysis of COMPETITIVE ARENAS and sources of COMPETITIVE ADVANTAGE, to establish a realistic VIEW of what the future holds. This leads to:

M - MISSION - from which

P - POSITIONING leads to -

A - ACTION by formulating the most appropriate COMPETITIVE STRATEGIES and PRODUCT/MARKET STRATEGIES.

The concept supports the current successful corporate planning system of any organization, company, group or industry.

b. PERSPECTIVE - CEO's initial subjective/objective perception of the future.

c. VISION - A energizing statement, based on a PERSPECTIVE, of what top management wants the company to become. Vision needs: noble purpose, sense of urgency and clear boundaries.

d. VIEW - A critical view of what the future holds in the for the company, in the future regulatory, competitive, economic and geo-political environments in which it must compete. The VIEW, based on careful in-depth analysis of COMPETITIVE ARENAS and sources of COMPETITIVE ADVANTAGE, leads to MISSION.

e. COMPETITIVE ARENAS - Analysis of the business and geographic arenas, where the company will compete in the future, and the sources of its competitive advantage.

f. CORPORATE MISSION - A statement of what role the company will seek to play in order to achieve its vision: what needs does it wish to satisfy, in which markets, with what products/services, against which competitors and how to measure success.

g. POSITIONING - What is the minds of the customers. The position that a company owns in the market place is the net result of the interaction of all the experiences, beliefs, feelings, knowledge and impressions that the market has accumulated about the company.

h. COMPETITIVE STRATEGY - A statemetn of how the company intends to achieve a sustainable competitive advantage with a variety of strategic thrusts.

i. PRODUCT/MARKET STRATEGIES - A statement on how to optimize product sales in selected markets by: internal growth or acquisition growth.

4.4 PERSPECTIVE

a. CEO's initial subjective/objective idea of the company in the future.

b. Not held down by past practice and "impossible" future goals.

4.5 VISION - CONCEPT

a. A VISION (based upon a PERSPECTIVE) is some idealized goal of what the chief executive wants the organization to ACHIEVE in the future. It must effectively communicate to the followers:

1. The nature of the present situation and its shortcomings2. The future role of the comoany3. How, when realized, this will remove existing shortcomings and

provide fulfillment of the followers' hopes4. The plans of action for realizing the vision

b. The vision INSPIRES every unit of the organization, by:

1. Creating meaning through communication2. Empowering subordinates with authority3. Credibility and responsibility4. Reinforcing employee success with rewards.

c. Effective visions are:

1. Simple and clear2. Make sense in the marketplace3. Stable, but constantly challenged4. Preached again and again5. The result of a long process of reshaping and clarification6. Able to INSPIRE people to achieve them with a sense of

URGENCY to act differently.7. Appealing to people's desire to: excel, be useful, be proud of what

they do, and have importance but not merely "to be right".8. Drawing clear boundaries.

4.6 VISION DEVELOPMENT

a. Corporate planning horizons are seldom (40%) more than five years ahead but corporate objectives ALWAYS include: profitability, growth and market share (survival). VISION is thus critical because it helps to CREATE THE FUTURE.

b. Formulating a Vision for the Company concentrates organizational energies on a common goal, and yet let opportunities emerge.

c. Vision development requires:

1. Very strong skills in environmental scanning in order to react more quickly to signals of change and to grasp new opportunities

2. Participative strategic management to reduce distance between "thinkers" and "doers"

4.7 VISION STATEMENT

a. A "Vision Statement" clearly communicates the vision to EVERY member of the organization.

b. An effective vision statement is:

1. Based upon a realistic VIEW of what the future holds.

2. Presenting the idealized goal of what the chief executive wants the organization to achieve in the future.

3. Able to INSPIRE people to achieve the goals with a sense of URGENCY to act differently.

4. Appealing to people's desire to: excel, be useful, be proud of what they do, and have importance but not merely "to be right".

5. Drawing clear boundaries between what the vision measn and does not mean.

b. The VISION statement is part of the VMPA concept which is applicable both for overall corporate strategy, and for EVERY unit in the organization.

Note: VISION provides the boundaries for a practical VIEW of the future. View development requires very careful analysis of COMPETITIVE ARENAS and COMPETITIVE ADVANTAGES, to ensure that it is realistic.

4.8 EXHIBIT

THE VISION OF GE

In his 1991 report to shareholders, Jack Welch, the CEO of General Electric describes GE's vision as follows:

1. The GE people realize the vital importance of speed of moving quickly in all activities ranging from the higher inventory turnover, to shorter product development cycles, to faster response to customer needs. This understanding of the need for speed and urgency, as an ingredient of success in the nineties, has led to a vision for the next decade as the "boundary-less" company.

2. This means a company in which suppliers are not outsiders - they become trusted partners in the total business process. Similarly customers are seen for what they are - the company's life-blood. The company's view of customers' needs, becomes identical with the customers' vision, and every staff member in the company focusses on satisfying those needs.

3. GE's internal functions also begin to blend together. Engineering does not design a new product which they pass over to manufacturing. A team forms in which engineering, manufacturing, marketing, sales, finance and all other functions participate. Similarly customer service becomes every staff member's responsibility, as does caring for the environment.

Comments:

a. This picture is inspiring, achievable and can be embraced by all GE's employees.

b. It also meets the criteria that the CEO and his team must be able to play an active and constructive role in furthering the movement towards the vision.

ADD THREE OTHERS


1. FIRST very briefly SCAN the learning patterns which follow.

2. THEN study each pattern very carefully. Think very CREATIVELY to DIRECTLY relate the old and new IDEAS to your ORGANIZATION ... try to "HOOK" the new learning into your past EXPERIENCE, IDEAS and PERCEPTIONS ...

3. NOTE that the patterns have been specially designed to STIMULATE both conscious non-conscious learning ... can you make them work for you?


(a) Reassemble in SG.

(b) Study the lecture very carefully and record key points in your notebook.

(c) Discuss any outstanding questions in SG.

(d) When the bell rings carry on with the case study which follows.

ASSIGNMENT 5.0 CASE STUDY - CIBA-GEIGY A (75 MINUTES)

5.1 INSTRUCTIONS

a. General:

CIBA-GEIGY A1 - is a case study; it is the story of a business in words and figures; the questions are to help you to analyze the problems.

b. Individual and SG work (45 minutes)

Read the case and study it carefully. Analyze all the key problems. Answer all the questions in your notebook and on the SG flip chart provided.

Discuss all the points together and formulate a specific plan of action; you need not all agree but you must decide.

c. Combined small group work (30 minutes)

Groups will assemble as follows:

A+D B+E C+F

Groups A, B and C will present the answers to all of the questions on the SG flip chart; they should try to achieve a consensus of the CSG on what has happened and what should be done.

d. Re-assemble in MG when the bell rings.

EXHIBIT 1

CIBA-GEIGY A1

QUESTIONS ON THE CASE

1. The main emphasis of the case is the new ALLCOMM organizational unit, but we must first understand the CG background. What is the story of the case? What are the key issues?

2. Why did CG top management want to change?

3. What was the traditional CG approach to managing services?

4. Which internal services could be externally competitive?

5. Suggest three alternative visions for Allcomm.

6. For Jurg Chresta, design and justify a brief "Vision statement" for Allcomm for the next five years.

EXHIBIT 2

CIBA-GEIGY A1

INSERT CASE***

UNIT II - MISSION

ASSIGNMENT 7.0 - MISSION - STUDY (75 MINUTES) 7.1 INSTRUCTIONS - INDIVIDUAL/SG WORK

(a) Reassemble in new SG


(c) Record seven significant points on the flip chart provided.


ASSIGNMENT 8.0 - LECTURE ON MISSION 8.1 METHOD

Read aloud, listen and respond verbally to any questions.

8.2 VMPA CONCEPT OF CORPORATE STRATEGY







8.2 MISSION - CONCEPT

a. The MISSION satisfies a need experienced by a group of customers, by supplying a product which is mix of goods and services, in an industry with a number of known competitors.

b. Corporate mission development starts with analysis of the business from narrow to broader lines:

Narrow lines Broader lines

Oil EnergyBanking Financial ServicesLocks Security & access systemsMovie theater EntertainmentAirlines CommunicationsCarpets Floor coverings

b. Only when we ask "what business are we in?" can we figure out who our customers and competitors are. The question of what business are we in forces the business to consider the:

1. Customers it wants to serve2. Competitors it must confront3. Resources it needs to master in order to ensure excellence

c. In achieving customer satisfaction, remember that:

1. We have to satisfy the needs and wants of all participants in the entire distribution chain

2. Any conflicts in the chain create hurdles to customer satisfaction

3. We must also identify future needs

4. We must compare all our findings with: previous performance, key competitors' performance, and industry benchmarks.

8.4 MISSION DEVELOPMENT

a. To moved from vision to mission requires analysis of many factors including: all the diferent environments, present performance compared to our competition, key success determinants, competitive arenas and advantage.

b. Environment - what are the anticipated regulatory, competitive, economic and geo-political environments in which the company must compete? Environmental/Industry analysis concerns: new entrants, suppliers, buyers and substitutes.

c. Performance - corporate analysis must determine:

1. What is our current performance level?2. What has been our strategy?3. What are our assets and skills?4. What are our weaknesses?5. What are the organization characteristics - structure, people, culture,

systems - that affect strategy?6. What is our existing business portfolio? What level of investment in

various product markets?7. What are our strategic problems, constraints and questions?8. What are our strengths and weaknesses relative to each strategic

group of competitors?

d. Key success determinants - what the company must be sure to do, and how this varies by market segment, location, customer or other key factors. How these determinants constrain, and also encourage, certain strategy options, and what trade-offs are feasible.

8.5 COMPETITIVE ARENAS AND ADVANTAGE

a. Understanding competitor's strategy, strengths and weaknesses, will identify opportunities and threats that require response.

b. Insights into future competitor strategies help to predict new opportunities and threats. The ability to forecast likely key competitor reactions is critical in selecting a strategy. Competitor analysis identifies strategic questions that need to be monitored over time.

c. Product life cycles are becoming shorter. Skill life cycles are becoming longer. Competitiveness depends more on skills and services than on products. Need to emphasize which skills, capabilities and technologies to build up, rather than which markets to enter with which products.

d. Competitive advantage must be worked on all the time because:

1. Unprecedented global competition2. Demographic change3. Shorter response times4. Accelerated technological change5. Deregulation6. Cooperative links between government and private enterprise in

many countries7. Takeover threats8. Continually changing customer needs and desires

8.6 SUSTAINABLE COMPETITIVE ADVANTAGE

a. For competitive advantage to be sustainable, depends upon:

1. The way we compete - strategy for products, positioning, pricing and manufacturing.

2. The basis of competition - skills and assets

3. Where we compete - selection of markets that value the strategy

4. Who we compete against - selection of competitors

b. A sustainable competitive advantage must be substantial enough to make a difference, sustainable against environmental change and competitor action, and be capable of being developed into visible business attributes that successfully influence customers.

8.7 MISSION STATEMENT

a. An effective mission statement must clearly define:

1. How the vision will be achieved

2. Target market

3. Key competitors

4. Specific consumer needs to be met

5. The mix of products/services

6. How success will be measured

b. Only when we ask "what business are we in?" can we figure out who our customers and competitors are, and thus develope a meaningful mission statement.

8.8 EXHIBIT

Sample brief mission statements

INSERT AVM


1. FIRST ...scan ...

2. THEN ... study CREATIVELY ...

3. Can you make them work for you?


(a) Reassemble in SG

(b) Study the lecture carefully

(c) Record key points in your notebook

(d) Discuss outstanding questions

(e) When the bell rings, carry on with the case study which follows

ASSIGNMENT 9.0 - CASE: CIBA-GEIGY A2 (90 MINUTES)

9.1 INSTRUCTIONS

a. In SG study the case carefully and answer all the questions in your notebook and on the SG flipchart (45 minutes)

b. Work in CSG as follows:

A + E B + F C + D

with groups D, E, F responsible for the CSG discussion (45 minutes)

c. Reassemble in MG when the bell rings

EXHIBIT 1

CIBA-GEIGY A2


1. Review the case again in relation to the vision statement which follows. Evaluate the vision statement in relation to what the future holds for Allcomm.

2. Discuss alternative product/service market arenas for Allcomm.

3. Identify Allcomm's competitive advantages/disadvantages.

4. What is the best pace of change for Allcomm?

5. For Jurg Chresta, design and justify a brief "Allcomm Corporate Mission Statement" for the next five years.

EXHIBIT 2

CIBA-GEIGY A2

ALLCOMM VISION STATEMENT FOR THE NEXT FIVE YEARS

Allcomm can be a leading profitable communications center serving a wide variety of clients apart from CG.

Allcomm can provide customers with a state-of-the-art solutions and services to all their international communication challenges.

Allcomm can be a company with an exciting and stimulating workplace with employees becoming shareholders.

EXHIBIT 3

CASE - CIBA-GEIGY A2

*** See UNIT I.

ASSIGNMENT 11.0 - SUMMARY LECTURE FOR PART 1

11.1 OBJECTIVES







11.2 CHALLENGES TO TOP MANAGEMENT

a. How to add value to the business? How to optimize performance now and for the future? How to meet the needs of the stakeholders - shareholders, staff, customers, suppliers and general public? How to create and retain profitable customers?

b. How to recognize the benefits, costs and penalties of change in anticipatory, reactive and crisis change situations.

c. How to understand the structure of customer needs and identify NOW the critical five year concerns, because:

1. Technology alone no longer satisfies the customers; it is merely the entrance ticket to the game.

2. Every competitor has the same level of technology, and yet our company must distinguish itself.

3. Customer needs must be identified to ensure a quality in product/service/design which gets to the market as fast as possible.

Note: All stakeholders want the company to achieve profitability, growth and survival, for a variety of different reasons i.e. cash flow, security, prestige, taxes, stability, quality, reliability, community economics, employment, welfare costs etc.








b. PERSPECTIVE - CEO's initial subjective/objective perception of the future.

c. VISION - A energizing statement, based on a PERSPECTIVE, of what top management wants the company to become. Vision needs: noble purpose, sense of urgency and clear boundaries.

d. VIEW - A critical view of what the future holds in the for the company, in the future regulatory, competitive, economic and geo-political environments in which it must compete. The VIEW, based on careful in-depth analysis of COMPETITIVE ARENAS and sources of COMPETITIVE ADVANTAGE, leads to MISSION.

e. COMPETITIVE ARENAS - Analysis of the business and geographic arenas, where the company will compete in the future, and the sources of its competitive advantage.

f. CORPORATE MISSION - A statement of what role the company will seek to play in order to achieve its vision: what needs does it wish to satisfy, in which markets, with what products/services, against which competitors and how to measure success.

g. POSITIONING - What is the minds of the customers. The position that a company owns in the market place is the net result of the interaction of all the experiences, beliefs, feelings, knowledge and impressions that the market has accumulated about the company.

h. COMPETITIVE STRATEGY - A statemetn of how the company intends to achieve a sustainable competitive advantage with a variety of strategic thrusts.

i. PRODUCT/MARKET STRATEGIES - A statement on how to optimize product sales in selected markets by: internal growth or acquisition growth.

11.4 VISION - CONCEPT

a. A VISION (based upon a CEO PERSPECTIVE) is some idealized goal of what the chief executive wants the organization to ACHIEVE in the future. It must effectively communicate to the followers:

1. The nature of the present situation and its shortcomings2. The future role of the comoany3. How, when realized, this will remove existing shortcomings and

provide fulfillment of the followers' hopes4. The plans of action for realizing the vision

b. The vision INSPIRES every unit of the organization, by:

1. Creating meaning through communication2. Empowering subordinates with authority3. Credibility and responsibility4. Reinforcing employee success with rewards.


a. A "Vision Statement" clearly communicates the vision to to EVERY member of the organization.




3. Able to INSPIRE people to achieve them with a sense of URGENCY to act differently.


5. Drawing clear boundaries between, what it is and what it is not.

b. The VISION statement is part of the VMPA concept which is applicable both for overall corporate strategy, and for EVERY unit in the organization

c. VISION provides the boundaries for a practical VIEW of the future. View development requires very careful analysis of COMPETITIVE ARENAS and COMPETITIVE ADVANTAGES, to ensure that it is realistic.

11.7 MISSION - CONCEPT

a. The MISSION satisfies a need experienced by customers, by supplying a product which is mix of goods and services, in an industry with a number of known competitors.

b. Corporate mission development starts with analysis of the business from narrow to broader lines:

c. Only when we ask "what business are we in?" can we figure out who our customers and competitors are. The question of what business are we in forces the business to consider the:

1. Customers it wants to serve2. Competitors it must confront3. Resources it needs to master in order to ensure excellence

11.8 COMPETITIVE ARENAS AND ADVANTAGE

a. Understanding competitor strategy, strengths and weaknesses, will identify opportunities and threats that require response.

b. Insights into future competitor strategies helps to predict new opportunities and threats. The ability to forecast likely key competitor reactions is critical in selecting a strategy. Competitor analysis identifies strategic questions that be monitored over time.

c. Product life cycles are becoming shorter. Skill life cycles are becoming longer. Competitiveness depends more on skills and services than on products. Need to emphasize which skills, capabilities and technologies to build up, rather than which markets to enter with which products.

d. Competitive advantage must be worked on all the time.

e. A sustainable competitive advantage must be substantial enough to make a difference, sustainable against environmental change and competitor action, and be capable of being developed into visible business attributes that influence customers.


a. An effective mission statements must clearly define:


2. Target market

3. Key competitors




b. Only when we ask "what business are we in?" can we figure out who our customers and competitors are, and thus develope a meaningful mission statement.

11.10 CONCLUSIONS

a. The concept of WPMA can support a variety of strategic planning systems.

b. VPMA is effective both at a departmental level and for the company as a whole.

c. Every manager must be inspired by the VPMA process, not just the financial controller.


1. FIRST ... .

2. THEN ... study .. CREATIVELY ...

3. Could you make them work for you?

11.12 INSTRUCTIONS (20 minutes)

a. Reassemble in SG

b. Review the Summary Lecture for Part I and discuss questions arising

c. To get the best out of Part II of the program, try to complete ALL of the following homework tonight:

1. Read the articles on corporate strategy

2. In your diary review the glossary and complete the learning summary sheet for each day with as much useful data as possible,

3. Do the optional minicase exercises in the diary and check the answers

4. Review your notes for Part I of the course and list outstanding questions to be resolved in Part II

Note of appreciation

Thank you for working so hard today.

We hope the AGL experience is rewarding for you.

From tomorrow ... it's downhill all the way ... !!

(if you do your all the preparation work)

15.12.93AGL NO. 100 - BUSINESS STRATEGY - 1999

A 2/3 DAY TRAINING PROGRAM FOR MANAGERS AND DIRECTORS

BRIEF BROCHURE

PROGRAM:The program is designed to provide managers and directors with the opportunity to achieve a deeper understanding of the new business strategy concepts, terminology, techniques and statements.

This broadening of knowledge, skills and attitudes, will enable them to capitalise on new business opportunities and to accelerate their professional development.

SPECIFIC OBJECTIVES:The specific learning objectives are to:

a. Understand strategic language and conceptsb. Use the cycle of VMPA (Vision, Mission, Positioning and Action)c. Develop confidence in analyzing strategic issues.d. Relate strategic concepts to current organizational problemse. Motivate further study in the future

SYLLABUS:The syllabus of the program includes: the VMPA concept, view and vision analysis, product/service market arenas, competitive advantage, corporate mission, positioning, segmentation, competitive strategy, product/market strategy and strategic implementation.

METHOD:The AGL method is designed to achieve rapid individual learning using special material and the stimulus of group activity without formal teaching. The groups use the material to find the answers to all problems and questions. The program provides the full cycle of pre-learning, learning and learning maintenance activity.

TIME:Two days or three days.

FACULTY:Professor Andre van de Merwe of the IMD (Lausanne) and Dr. Bob Boland of the European Institute (Geneva).

FURTHER INFORMATION:Fax 33-50-40-89-82 or 41-21-803-3929.

AGLSTD2DRAFT 18.12.93



DAILY WORK PACK - PART II(Retained)

Copyright:

AVM/RGAB 1993/4No copies of without written permission.

PROGRAM - PART IIVERSION A - 2 1/2 DAYS - STARTING IN THE MORNING

Activity Group Day II

UNIT III1. Review/Quiz SG (new) 11.00 - 11.30

2. Study: PositioningIND 11.30 - 12.30SG Lunch3. Lecture MG 13.30 - 14.00SG4. Case: IND 14.00 - 15.15Ciba-Geigy B1 SGCSG Tea5. Lecture MG 15.30 - 16.00CSG6. Case: IND 16.00 - 16.15Bill Brown SG

Case:Bill Brown SG 16.15 - 16.30

UNIT IV:7. Study- Action IND 16.30 - 17.00SG (new)

8. Lecture - Action MG 17.00 - 17.30

Preparation for INDDay 3 SG 20.00 - 21.00 Day III9. Case: IND 09.00 - 10.30Ciba-Geigy B2 SGCSG Coffee10. Lecture: MG 10.45 - 11.30CSG11. Quiz IND 11.30 - 12.1512. Summary Lecture MG 12.15 - 13.00

PROGRAM - PART IIVERSION B - 2 DAYS - STARTING IN THE MORNING

Activity Group Day II UNIT III:1. Review/Quiz SG (new) 08.00 - 08.45

2. Study: Positioning IND SG 08.45 - 10.00

3. Lecture MG 10.00 - 10.30 SG Coffee4. Case: IND 10.45 - 11.45 Ciba-Geigy B1 SGCSG

5. Lecture MG 11.45 - 12.15 CSG

6. Case: IND 12.15 - 12.30 Bill Brown SG Lunch- Case:Bill Brown SG 13.30 - 13.45

UNIT IV: 7. Study - Action IND 13.45 - 14.15 SG

8. Lecture MG 14.15 - 14.45 SG

9. Case: IND 14.45 - 15.30 Ciba-Geigy B2 SG

- Case: CSG 15.30 - 16.00 Tea10. Lecture: MG 16.15 - 16.45 CSG11. Quiz IND 16.45 - 17.3012. Summary Lecture MG 17.30 - 18.00

UNIT IV - POSITIONING & COMPETITIVE STRATEGY

ASSIGNMENT 1.0 REVIEW AND SHORT QUIZ (30 MINUTES)

1.1 INSTRUCTIONS

(a) Assemble in new SG

(b) Discuss outstanding questions from Part I

(c) Do the short quiz which follows. Work on each question individually and then compare answers in SG

(d) When all answers have been completed, check with the correct solution and discuss points arising


ASSIGNMENT 1.0 - SHORT QUIZ - QUESTIONS

1. Hewlett Packard Mission Statement

To let HP growth be limited only by the profit and the ability to develop and produce technical products that satisfy real customer needs.

HP does not believe that large size is important for its own sake, but continuous growth is necessary for at least two reasons:

a. Firstly HP serves a rapidly growing and expanding segment of the technological society. The company cannot maintain a position of strength and leadership in its field without growth.

b. Secondly, growth is important in order to attract and hold high calibre people. Such individuals will only align their future with a company that offers them considerable opportunities for personal progress. These opportunities are greater and more challenging in a growing company.

Question: How effective is this as a mission statement or perhaps as a vision statement?

2. Domino Pizza Mission Statement

Through continuous innovation and doing unto others what we want them to do to us, we will attain:

Customers' belief that we are the best place to shop for their needs.Team members who cannot think of a better company to work for.Community and governments that consider us a fine example of what business should

be.Patent company proud to have us as part of their team.Suppliers excited enough to call us their favorite account.

... resulting in constant improvement in those key operations which are so vital for our success.


3. Twenty Questions - following

ASSIGNMENT 1.0. - SHORT QUIZ - QUESTIONS

Twenty Questions

1. Overall cost leadership, differentiation and focus, are all part of:

a. visionb. product/market strategyc. positioningd. competitive strategy

2. STRATEGIES that concentrate on existing markets, new market development, new product development, innovation based on existing resources, buying direct competitors, joint ventures, vertical integration, buying synergistic businesses etc. are ALL:

a. product/market strategiesb. competitive strategiesc. corporate missionsd. marketing strategies

3. In practice corporate stakeholders are mainly:

a. shareholdersb. all of these and more partiesc. banksd. workers and management

4. The VMPA concept stands for:

a. vision, mission, people, actionb. view, mission, propositioning, actionc. vision, mission, positioning, actiond. vision, mission position, alternatives

5. The part of corporate strategy which deals with what the future holds, anticipated regulatory, competitive, economic and geo-political environments in which the company must compete, is called a:

a. study b. missionc. researchd. view

6. Questions such as: Where are we going to? What may stop us? Are we any good anyway? How to choose a strategy? How to implement the strategy to ensure success? are essentially ... questions.

a. marketingb. strategicc. philosophicald. financial

7. In 1993, top management must begin to consider the critical five year issues, because:

a. Technology alone no longer satisfies the customers; it is merely the

entrance ticket to the game.b. Every competitor has a different level of technology, and yet must

distinguish itself.c. Every customer's needs must be identified to ensure a quality in

product/service/design which gets to the every part of the market as fast as possible.

d. Product life cycles are longer.

8. A strategic vision has all of these steps EXCEPT:

a. Controlling employee successb. Empowering subordinates with authorityc. Credibility and responsibilityd. Creating meaning through technology

9. In formulating a Vision flexible companies do NOT need:

a. Very strong skills in environmental scanning.b. Quick reaction to signals of changec. Ability to grasp new opportunitiesd. Strong strategic management that separates the "thinkers" from the "doers"

10. Identifying competitive arenas, and sources of competitive advantage, leads to development of corporate:

a. healthb. missionc. positioningd. vision

11. Positioning enables development of the:

a. visionb. missionc. competitive strategyd. emotional satisfaction

12. A statement of what role the company will seek to play in order to achieve its vision: what needs does it wish to satisfy in which markets with what products/services against which competitors and how will it measure its success, is a corporate:

a. visionb. missionc. product/market strategyd. competitive strategy

13. Which of the following is NOT part of competitive strategy?

a. achieving sustainable competitive advantage. b. overall cost leadership.c. product/market strategyd. segmentation

14. Consumer analysis involves all of the following EXCEPT:

a. segmentationb. customer motivationc. unmet customer needsd. advertising effectiveness

15. The process of dividing a market up on the basis of similar characteristics so that investment can be made where it will be most effective in establishing a competitive advantage, is:

a. positioningb. segmentationc. competitive strategyd. corporate mission

16. A profound understanding of customers needs, usually comes from:

a. market analysisb. market segmentationc. target selectiond. marketing mix

17. A competitive strategy involving: special product line, target to a special market segment or limitation to a specific geographical area. etc is known as strategic:

a. positioningb. focusc. competitivenessd. planning

18. A competitive strategy involving: experience curve payoffs, no-frills products, product special design, raw-material sourcing, low-cost distribution, lowering labor costs, government subsidies, location changes, production innovations, buying competitors, automation, reducing overheads etc. is usually:

a. profitableb. unprofitablec. low cost strategic thrustd. racist

19. The most critical part of competitive analysis is usually:

a. visionb. missionc. competitive arena selectiond. positioning

20. Product/market strategies from internal growth use current competencies to achieve low risk steady growth, by concentration on current business with single market/technology activity. The result is usually:

a. moderate risk; slow growth; narrow range of investment options; normal profit.

b. low risk; slow growth; high profit.c. low risk; slow growth; low profit.d. high risk for R&D and pre-marketing cost; very high initial profits; difficult to

achieve long-term success.

ASSIGNMENT 1.0 - ANSWERS TO SHORT QUIZ

1. Hewlett Packard Mission Statement


1. It is not a vision statement because: there is no "noble purpose" to inspire the staff and no common achievable objective.

2. It is not a mission statement because: it has no defined target market, and no defined specific needs to be met with a mix of product/service against known competitors.

3. This is a broad statement of intent which is unfocussed and uninspiring.

2. Domino Pizza Mission Statement


1. This is not a mission statement but a good vision statement. It shows what the company wants to be in the future. It is inspiring and has a noble purpose.

2. However it gives no clear definition of what DP must do, to have a worthwhile future.

3. Twenty Questions

dabcd baadb

cbcdb abcca

ASSIGNMENT 2.0 STUDY - POSITIONING AND COMPETITIVE STRATEGY(60 MINUTES)

2.1 INSTRUCTIONS

(a) Assemble in SG




ASSIGNMENT 3.0 - LECTURE - POSITIONING








3.2 POSITIONING - CONCEPT

a. Positioning is a strategic issue - it is the first element of any marketing strategy aimed at a target market.

b. Positioning is a strategic statement about how the company/brand wants to be "seen" on the market place. Based on a "vision" of what the company wants to be and how it wants to be perceived by its stake holders, it guides the development and execution of the total marketing strategy.

3.3 PRODUCT DEVELOPMENT

a. Product development has a great influence on sales volume and profit, and is vital for the growth of the firm.

Products move through a cycle in their popularity and profitability, introduction, growth, maturity, saturation and decline.

A continuing flow of new products is needed to perpetuate profits, with a sound product policy planned several years in advance.

Anticipating future market demands is a vitally important aspect of product development.

b Product policy involves attention to: market segmentation product differentiation, product-line simplification, product-line diversification, planned obsolescence, forecasting market trends, new-product introduction.

Note: A product can be a physical product or a service or some combination of the two, to form a "hard/soft" total product. In 1999 more and more originally physical products, can only be successful as part of an integrated "product/service"

c. Differentiation goes hand in hand with positioning. Differentiating a product, service or brand is making it different. Positioning is ensuring that a product, service or brand "owns" a specific spot in the market.

d. The attributes of product/service "reputation" are: quality of management, products and services innovativeness, long (not short) term investment value financial soundness, and the ability to attract and develop suitable staff.

3.4 POSITIONING IN THE MINDS OF CUSTOMERS

a. Positioning is what is in the minds of customers; it is based on perception.

b. The position a corporation "owns" in the marketplace is the net result of the interaction of all the experiences, beliefs, feelings, knowledge and impressions that the market has accumulated about that company.

c. Your position in the minds of your customers is strong if they:

1. Understand what makes your product or service special 2. Understand your product or service well enough to describe it

clearly3. Value your brand so much that they are willing to pay more for

whatever makes it special4. Feel so strongly about your brand that they will defend it - even at a

higher price - when it comes under attack

3.5 POSITIONING - DEVELOPMENT

a. Successful positioning is:

1. Unique and distinctive2. Relevant to a given target audience3. Profitable relative to objectives

4. Credible because it's executable 5. Transferable globally

b. The challenge is to keep on positioning your company (and its products) in such a way that they always hold in your target customers' minds, there where they expect the ideal to be.

c. The ultimate object of positioning is to make your market feel no one else can be a completely satisfactory substitute for them.

d. To qualify as having a position, a brand, product or service must therefore have three characteristics; it must be widely recognized by people who use it; it must be preferred by a significant target group over competing products; it must have a sense of uniqueness so that it is difficult to copy

e. Product complexities make it easier to make products different.But if the difference doesn't exist in the customers mind it doesn't exist.

f. When positioning is poor the product/service is:

Pushed into head-on competitionPushed where no one else wanted to beOutdatedOut of line with strategyFuzzy - uncertainor even - NO POSITION - no one has heard of the product/service.

3.6 POSITIONING STATEMENT

a. An effective positioning statements involves:

1. Presenting a meaningful theme.

2. Meeting customer beliefs about what the company can and cannot do.

3. Being realistically achievable in relation to company capabilities.

4. Helping long term performance goals.

5. Showing company products/services as unique and superior to the competition.

6. Making it difficult for competitors to match or exceed the positioning in the minds of the customers.

b. Overall criterium for effectiveness is: does it generate enthusiasm and commitment within the organization? Examples: AVIS, British Airways and SAAB

3.7 PRODUCT/MARKET STRATEGIES

a. How to compete with products/services in markets, by:

1. Concentrating on existing markets/products2. New market/product development3. Innovation based on existing resources4. Buying direct competitors5. Vertical integration6. Buying synergistic businesses

b. Product/market risk will be discussed later.

3.8 COMPETITIVE STRATEGY

a. Competitive strategy involves how the company intends to achieve a sustainable competitive advantage in its chosen product markets, with a variety of strategic thrusts, which may be:

1. Focus2. Overall cost leadership3. Product differentiation4. Defensive5. Synergistic6. Broad competitive scope7. Pre-emptive

See the Exhibit for alternative strategies in more detail.

b. Competitive strategy must seek a sustainable competitive advantage, which is substantial enough to

1. Make a difference2. Sustain against environmental change and competitor action3. Develop into visible business attributes that influence customers.

c. Smaller companies often succeed with a competitive strategy that has a narrower scope (focus)

3.8 KEYS TO COMPETITIVE STRATEGY

a. Synergy - Some commonality of operations such as:Distribution, image and its impact on the market, sales and advertising effort, plant usage, R&D effort, operating costs, raw materials purchasing etc.

b. Differentiation - in:

Product quality i.e. performance, durability, conformance, features, name, reliability, serviceability, finish etc. or

Service quality i.e. tangibles, reliability, responsiveness, competence, credibility, empathy, courtesy, communication etc.

3.9 COMPETITIVE STRATEGY STATEMENTS

a. An effective competitive strategy statement must cover:

l. Products/services2. Market segmentation3. Customers4. Competitive advantage5. Costs6. Structure

b. Examples in Exhibit.

EXHIBIT 1ALTERNATIVE COMPETITIVE STRATEGIES

The variety of strategic thrusts includes: focus, overall cost leadership, product differentiation, defensive, synergistic, competitive scope, pre-emptive moves.

1. Focus:

Special product line, target to a special market segment, limit to a specific geographical area, focus on cost leadership and/or differentiation of products/services in a narrow market.

2. Overall cost leadership:

With lower costs than rivals, experience curve payoffs, no-frills product, product special design, raw-material sourcing, low-cost distribution, lowering labor costs, government subsidies, location changes, production innovations, buying competitors, automation, reducing overheads etc.

3. Product differentiation:

a. Product quality - performance, durability, conformance, features, name, reliability, serviceability, fit and finish

b. Service quality - tangibles, reliability, responsiveness, competence, credibility, empathy, courtesy, communication

c. Product delivery - of something the market thinks is important and unique

EXHIBIT 1ALTERNATIVE COMPETITIVE STRATEGIES

(continued)

4. Defensive:

Divest, retrench (to reduce break-even point), or liquidate to be better able to defend in the product/markets where business continues.

6. Synergistic - with commonality in operations for: distribution, image and market impact, sales and advertising effort, plant usage, R&D effort, operating costs, raw material purchasing, and up-stream purchasing, which will either lead to lower cost per unit or increased revenue per unit sold.

7. Competitive scope - how to narrow or broaden the scope of product/market operations.

8. Pre-emptive - with:

a. Supply systems - secure access to raw materials, preempt production equipment, dominate supply logistics.

b. Product - preempt a position, develop a dominate design, secure superior development personnel.

c. Production systems - develop production processes, expand capacity, integrate vertically.

d. Customers - train customers in usage, get customers to make long term commitment, gain specialized knowledge of a customer set.

e. Distribution and service systems - occupy prime locations,m dominate key distributors or outlets.

EXHIBIT 2NOTE ON PRODUCT LIFE

CYCLES

The product life cycle is a strategic tool with five phases: introduction, growth, maturity, saturation and decline. Each phase has special characteristics.

INTRODUCTORY PHASE:

Market Minimum awareness, expensive R & D, advertising, testing

Innovation Consistently launches new innovationsMarketing EnterEmphasis Create market primary demandDiffusion InnovatorsR & D Advanced research patents

GROWTH PHASE:

Market Customer take-off, profit, expansion, real growth, competition

Innovation Wait, follow, improveMarketing PenetrateEmphasis Grow demand, create market shareDiffusion Early adoptersR & D Product development

MATURITY PHASE:

Market Buyers decreased or static market share, profitability down, competition discounts, more advertising, introduction substitutes

Innovation Find niche emerged or untouched. Improve price and performanceMarketing MaintainEmphasis Differentiate, segmentation, revitalize, maintain market & shareDiffusion Early acceptorsR & D Technical service

EXHIBIT 2NOTE ON PRODUCT LIFE

CYCLES(continued)

SATURATION PHASE:

Market Profitability low, replacements, older market, substitutes, eroding market

Innovation Substitutes availableMarketing HarvestEmphasis nilDiffusion Late acceptorsR & D Technical services

DECLINE PHASE:Market Market disappears

Innovation nilMarketing DivestEmphasis nilDiffusion LaggardR & D nil


1. FIRST very briefly ... SCAN the learning patterns which follow.

2. THEN ... study them carefully ... try very CREATIVELY to RELATE them to your own experience, problems and environment ... try to achieve a NEW PERCEPTION of strategic problems ... directly related to your own organizational unit ...

3. NOTE that the patterns have been specially designed to STIMULATE both conscious non-conscious learning ... can you make them work for you?



(b) Study the lecture carefully and record key points in your notebook

(c) Discuss outstanding questions

(d) When the bell rings continue with the case study which follows.

ASSIGNMENT 4.0 CASE - CIBA-GEIGY B1 (60 MINUTES)

4.1 INSTRUCTIONS


(b) Study the case and answer all the questions in your notebook and on the SG flipchart (30 minutes)

(c) Then work in CSG as follows:

A + D B + E C + F

with groups A, B, and C responsible for the CSG discussion


EXHIBIT 1

CIBA-GEIGY B1


1. Study the story of the case and identify the key points arising.

2. Evaluate the Corporate Mission Statement.

3. How should Alcomm position itself?

4. What are some of the paradoxes that Allcomm has to manage?

5. Design and justify a "Competitive Strategy Statement" for Allcomm.

EXHIBIT 2CIBA-GEIGY B

BRIEF ALLCOMM CORPORATE MISSION STATEMENT FOR THE NEXT FIVE YEARS

a. Allcomm will satisfy the total communication needs of CG companies as well as non-competitive other corporations, in all fields where Allcomm perceives itself to have existing or potential expertise.

b. Allcomm will compete against advertising and communication agencies worldwide.

c. Allcomm will measure success by achieving acceptable profitability before the CG subsidy lapses, and by whether the contribution of non CG companies to Allcomm's overall profit is increasing.

d. In this process Allcomm will retain and extend its CG business.

EXHIBIT 3

CIBA-GEIGY B*** insert case

ASSIGNMENT 6.0 - BILL BROWN (30 MINUTES)

6.1 INSTRUCTIONS


(b) Study the case and individually answer all the questions (on the worksheet in the diary)

(c) Compare your answers in SG

(d) When the bell rings, stop for lunch!

(e) After lunch, check with the correct solutions and discuss outstanding questions

EXHIBIT 1

BILL BROWN - QUESTIONS - MINICASES

Bill Brown is a consultant in corporate strategy, faced with the problems outlined in the six minicases which follow.

For efficient and effective learning from each minicase:

1. Work individually to analyze the issues and record a decision in your note book.

2. Then discuss in SG and record your consensus on the flip chart (EI - emotional investment).

3. Then check with the answer which follows and give yourself a score out of 10. Record the total score out of 60, in the diary.

EXHIBIT 2 BILL BROWN

1. GM's Mission Statement

GM is a highly integrated business which is primarily involved in the manufacture and the sale of automobiles and trucks, and also of related parts and accessories, classified as automotive products.

GM products are mostly marketed through jobbers, distributors and retail dealers in the USA and Canada. Overseas marketing is through distributors and dealers.

GM Acceptance Corporation and its subsidiaries offer financial services and certain types of automobile insurance to dealers and customers. This is done to assist in the merchandising of GM products.

Question: What does this mission statement do? What does it fail to do?

2. Avis

"Avis is the only the number 2 in car rentals. Why should you see us? We try harder."

Question: Is this a successful positioning statement? Why?

3. British Airways

"The world's favorite airline."


4. SAAB

"You have a heart, a mind and a conscience - so should your car."


EXHIBIT 2 BILL BROWN

5. Identify the company stakeholders? Why do they all want the company to achieve profitability, growth and survival?

6.

7.

EXHIBIT 4

BILL BROWN - ANSWERS

1. GM's Mission Statement

Question: What does this mission statement do? What does it fail to do? Answers ...

a. The mission statement does:

State the products but only in an unfocussed way.

Specific how the products are to be marketed, at least though channels and geographic markets.

b. The statement fails to:

Define customer needs it seeks to satisfy in which target markets.

Describe the competitors to be faced.

Set objectives, methodology and criteria to measure success.

c. Overall it is an unfocussed statement which will NOT of any great strategic help.

2. Avis

Question: Is this a successful positioning statement? Why? Answers ...

This is successful because it:

Takes the customers into Avis's confidenceIs believable.Generates enthusiasm and competitive spirit amongst Avis staff. Cannot easily be usurped by competitors in the minds of customers.

EXHIBIT 4


3. British Airways


BA used its size as a positive element. In service industries "size" is often equated with "less efficient and less caring"

BA promotional literature emphasized that BA was very "customer caring", and because of this it was the "World's favorite airline", and therefore successful.

4. SAAB


SAAB expands on this to tie the:

"heart-phase" to SAAB's thirty years successful rally heritage.

"mind-phase" to the computerized use of road and driving data during use to achieve optimum performance.

"conscience-phase" to relate to the SAAB environmentally friendly air-conditioning, emission filtering and general operational effectiveness.

All of this is linked to the similarity of a person to a car in that both need a healthy balance.

This attempts to ensure that SAAB is seen as a unique an successful luxury car, which not only appeals to the discriminent motorist, but in the process becomes an integral part of his successful life.

EXHIBIT 4


5. Company stakeholders

Stakeholder Objectives

Shareholders share value increaseWorkers improved payroll and employment

security/safetySuppliers low credit risk and profitable supplyCustomers stable product quality and supplyLocal government increased local taxes and lower local

unemploymentBanks better loan securityEnvironmental NGO's more environmental responsibility

6.

7.

UNIT IV - ACTION

ASSIGNMENT 7.0 STUDY - ACTION (60 MINUTES)

7.1 INSTRUCTIONS - INDIVIDUAL/SG WORK

(a) Assemble in new SG




ASSIGNMENT 8.0 - LECTURE - ACTION(60 Minutes)







b. The concept supports the current successful corporate planning system of any organization, company, group or industry.

8.2 OVERALL CORPORATE STRATEGY

a. Corporate strategies focus on what business the company should be involved with, and how its priorities and resources should be allocated. Business level strategies focus on how a business unit or division of a company chooses to compete in an industry.

b. Overall corporate strategy is derived from three key elements:

1. Positioning2. Competitive strategies3. Product/market strategies

c. POSITIONING shows how the company/brand wants to be "seen" on the market place.

d. COMPETITIVE STRATEGY shows how the company intends to achieve a sustainable competitive advantage in its chosen product/markets.

d. PRODUCT/MARKET STRATEGY defines markets, products and services, and the means to develop them.

8.3 POSITIONING

a. Positioning is a strategic issue - it is the first element of any marketing strategy aimed at a target market.

b. Positioning is a strategic statement about how the company/brand wants to be "seen" on the market place. Based on a "vision" of what the company wants to be and how it wants to be perceived by its stake holders, it guides the development and execution of the total marketing strategy.


a. Such strategies deal with how to compete with products/services in markets by:


b. Product/market risk evaluation is critical.

8.5 COMPETITIVE STRATEGIES

a. Effective competitive strategies must cover:

l. Products/services2. Market segmentation3. Customers4. Competitive advantage5. Costs6. Structure

b. Competitive strategy must seek a sustainable competitive advantage, which is substantial enough to make a difference.

8.6 ALTERNATIVE CORPORATE STRATEGIES

a. Three major alternatives:

1. Continue current operations in present markets 2. Develop new markets3. Develop new products for present markets

b. See Exhibit for detail.

8.7 MANAGING STRATEGIC CHANGE

a. Task of adjusting the business to emerging opportunities and problems. Necessary to stop deterioration or capitalize on new opportunities.

b. The time needed to implement different competitive strategies, as well as their pay-off time, will vary extensively. The change process takes time as it must work through the various categories of employees.

c. Providing solutions means getting people to work effectively in teams. The team becomes the core value-creating unit: it has to be chosen, evaluated and rewarded accordingly.

d. Solution providers need time with customers. This has to be taken into account in pricing strategies. Flexible pricing i.e. bundling and unbundling, gives firms the options they need to provide different customers with individualized solutions.

8.8 STRATEGY IMPLEMENTATION

a. Highly social activity, since we have to work though people.

b. Highly emotional activity, since we are changing people's behavior and value systems.

c. Current problems of implementation:

1. Took longer that anticipated2. Major unforseen problems arose3. Coordination of implementation not efficient enough4. Other activities and crises prevent management from putting

decision into effect5. Inadequate employee competence and ability6. Training and instructions for lower management levels not

adequate.

d. Why do some strategies fail?

EXHIBIT 1

ALTERNATIVE CVORPORATE STRATEGIES

1. Continue current operations:

Selling present products/services in present markets, but with improved production, marketing and financial control systems; improve consumer analysis and services to cover full cycle of consumer activity needs from purchase to disposal.

2. Develop new markets:

Selling present products in new markets. Specific options:

1. Open additional geographical markets, by regional, national and international expansion.

2. Attract other market segments, by developing new appealing product versions, causing other distribution channels and promoting though other media.

3. Develop new products for present markets:

1. New product features:

Adapt to other ideas and developmentsModify i.e. change shape, color, motion, sound, smell etc.

Magnify i,e, longer, thicker, extra valueReduce i.e. shorter, thinner, lighter

Substitute i.e. other ingredients, processes, powerRearrange with other patterns, payouts, sequences, components

Reverse i.e. inside out

Combine i.e. blend, alloy, ensemble, combine units, purposes, appeals, ideas etc.

2. New quality variations

3. Product proliferation with additional models/sizes.

4. Creative ideas please ... innovation, buying direct competitors, vertical integration, buying synergistic businesses ... ???


1. FIRST ... scan ...

2. THEN ... study ...

3. Can you make them work for you?



(b) Study the lecture carefully and record key points in your notebook

(c) Discuss outstanding questions

(d) When the bell rings, carry on with the case study which follows

ASSIGNMENT 9.0 CASE - CIBA-GEIGY B2 (75 MINUTES)

9.1 INSTRUCTIONS


(b) Study the case carefully and answer all the questions in your notebook and on the SG flipchart (45 minutes)

(c) Work in CSG as follows:

A + E, B + F, C + D

with groups D, E, F responsible for the CSG. D, E, F represent the Allcomm

A, B, C represent the CG


EXHIBIT 1

CIBA-GEIGY B2


1. Study again the full case carefully to understand the story behind the figures. What new perceptions/ideas do you now have about the case?

2. Evaluate the Competitive Strategy Statement.

3. Criticize the product/market strategy adopted by Allcomm.

4. What are the success factors that have contributed to the Allcomm change process?

5. What are the challenges that Allcomm now faces?

NOTE: Remember to answer every question as fully as you can ...

EXHIBIT 2

CIBA-GEIGY B2

ALLCOMM COMPETITIVE STRATEGY STATEMENT STRATEGY

a. Allcomm must use its existing strengths to compete in the market place, by using product/service differentiation, as a key competitive strategy.

b. This will enable delivery of services to CG in a way that is unique. Naturally for the CG market, Allcomm will focus on the each company in such a way that Alllcom is regarded as particularly qualified to handle CG company problems.

c. For both markets, CG and outside, Allcomm has to provide a broad service offering i.e. the complete competitive scope has to be extensive.

d. All of this is vital, if Allcomm is to fulfill the vision and mission statements of being a total international communications agency.

EXHIBIT 2

CIBA-GEIGY B2

***insert case

11.0 - QUIZ (45 MINUTES)

11.1 INSTRUCTIONS


(b) Do the quiz of 60 questions on the answer sheet in the diary

(c) Check your answer with the organizer and resolve outstanding questions

(d) Complete the first feedback form in the course diary and give it to the organizer.


12.0 ASSIGNMENT - SUMMARY LECTURE FOR PART II (30 MINUTES)

12.1 OBJECTIVES







12.2 WORK COMPLETED

I Vision II Mission MinicasesIII Positioning & competitive strategiesIV Action & product/market strategies

12.3 THE VMPA CONCEPT OF CORPORATE STRATEGY a. The VPMA concept for developing corporate strategy involves:





The concept supports the current corporate planning system of any organization, company, group or industry.


V - VISION derived from a VIEW of what the future holds, leading identification of COMPETITIVE ARENAS and sources of COMPETITIVE ADVANTAGE, leading to:



A - ACTION with a COMPETITIVE STRATEGIES and PRODUCT/MARKET STRATEGIES.

b. The concept supports the current successful corporate planning system of any organization, company, group or industry.


a. A "Vision Statement" clearly communicates the vision to EVERY member of the organization.




3. Able to INSPIRE people to achieve them with a sense of URGENCY to act differently.


5. Drawing clear boundaries.

b. The VISION statement is part of the VMPA concept which is applicable both for overall corporate strategy, and for EVERY unit in the organization


a. An effective mission statements must clearly define:


2. Target market

3. Key competitors




b. Only when we ask "what business are we in?" can we figure out who our customers and competitors are, and thus develop a meaningful mission statement.

12.5 POSITIONING STATEMENT

a. An effective positioning statements involves:

1. Presenting a meaningful theme.

2. Meeting customer beliefs about what the company can and cannot do.

3. Being realistically achievable in relation to company capabilities.

4. Helping long term performance goals.

5. Showing company products/services as unique and superior to the competition.

6. Making it difficult for competitors to match or exceed the positioning in the minds of the customers.

b. Overall criteria for effectiveness is: does it generate enthusiasm and commitment within the organization? Examples: AVIS, British Airways and SAAB

c. Differentiation of a product, service or brand is making it different. Positioning is ensuring that a product, service or brand "owns" a specific spot in the market.

b. The attributes of product/service "reputation" are: quality of management, products and services innovativeness, long (not short) term investment value financial soundness, and the ability to attract and develop suitable staff.

12.5 POSITIONING FOR COMPETITIVE STRATEGY

a. Seek a sustainable competitive advantage with the most appropriate strategy and scope. Smaller companies succeed with a narrower scope (focus).

b. Questions to ask. Do you remember?

c. For competitive advantage to be sustainable, depends upon four factors.

d. A sustainable competitive advantage must be substantial enough to make a difference.

12.6 COMPETITIVE STRATEGY

a. Competitive strategy involves how the company intends to achieve a sustainable competitive advantage in its chosen product markets, with a variety of strategic thrusts, which may be:

1. Focus2. Overall cost leadership3. Product differentiation4. Defensive5. Synergistic6. Broad competitive scope7. Pre-emptive

b. Competitive strategy must use synergy and differentiation to seek a sustainable competitive advantage.

12.7 CORPORATE STRATEGY

a The COMPETITIVE STRATEGY shows how the company intends to achieve a sustainable competitive advantage in its chosen product/markets.

b. The PRODUCT/MARKET STRATEGY defines markets, products and services, and the means to develop them.

c. Corporate strategies focus on what business the company should be involved with, and how its priorities and resources should be allocated.

d. Business level strategies focus on how a business unit or division of a company chooses to compete in an industry.


a. How to compete with products/services in markets, by:


b. Product/market risk

12.9 CORPORATE STRATEGY - ALTERNATIVES

a. Continue current operations - selling present products/services in present markets, but with improved production, marketing and financial control systems; improve consumer analysis and services to cover full cycle of consumer activity needs from purchase to disposal.

b. New market development - selling a present products in new markets, with specific options:

1. Open additional geographical markets2. Attract other market segments

c. New product development for present markets, with specific options:

1. Develop new product features:2. Develop quality variations3. Product proliferation with additional models/sizes.

12.10 MANAGING STRATEGIC CHANGE

a. Task of adjusting the business to emerging opportunities and problems.

b. Necessary to stop deterioration or capitalize on new opportunities.

c. The time needed to implement different competitive strategies, as well as their pay-off time, will vary extensively.

d. The change process takes time as it must work through the various categories of employees.

e. Providing solutions means getting people to work effectively in teams. The team becomes the core value-creating unit: it has to be /chosen, evaluated and rewarded accordingly.

f. Solution providers need time with customers. This has to be taken into account in pricing strategies. Flexible pricing--i.e., bundling and unbundling--gives firms the options they need to provide different customers with individualized solutions.

12.11 STRATEGY IMPLEMENTATION

a. Highly social activity, since we have to work though people.

b. Highly emotional activity, since we are changing people's behavior and value systems.

c. Current problems of implementation:

1. Took longer that anticipated2. Major unforseen problems arose3. Coordination of implementation not efficient enough4. Other activities and crises prevent management from putting decision into effect5. Inadequate employee competence and ability6. Training and instructions for lower management levels not adequate.

d. Why do some strategies fail? (Exhibit )

12.12 LEARNING PATTERNS REVIEW

1. FIRST ... .

2. THEN ... study ...

3. Could you make them work for you?

12.13 CONCLUSIONS

a. The program was designed to help you to develop strategic language, concepts and confidence and to motivate you toward further study and practice in the future.

b. The VMPA concept is useful at every level in the company organization and be easily adapted/customized to support the current strategic planning system already established in a company or group.

c. Other conclusions ... from your group?

FINAL NOTE

This ends our AGL program. We hope it has inspired you to develop your skills by practical application.

Thank you for your interest and hard work. Keep the workpack and glossary handy as a daily reference.

We hope that you have much enjoyed the AGL experience and that it motivates you to read widely in strategy and to continue your studies in the future.

Now reinforce your learning from the program by following the LRT (Learning Recall Tape) routine, as explained by the organizer, for about one hour each day, on days 6, 12, and 24 following completion of the AGL program.

Then please send us the Final Feedback Summary on day 28.

We trust that you have found AGL to be both "efficient" (doing things right) and "effective" (doing the right things).

Thank you for being a member of the program.

AVM/RGABIMD, Lausanne, 12.12.93

AGLSTGUDRAFT/12.12.93



GUIDE

To be used and handed back to the Organizer

Copyright:


QUIZ

Choose if possible the "most correct" answer and mark the answer sheet a, b, c, d with an "X". PLEASE DO NOT MARK THE QUIZ.

Unit 1

1. In developing corporate strategy, a view leads to a "vision" of:

a. what the future will beb. profitable marketsc. management's real objectives

d. positioning for the future

2. The beliefs, feelings, knowledge and impressions that the MARKET has accumulated about the company, is due to:

a. positioningb. strategic planningc. marketing focusd. luck

3. Overall cost leadership, differentiation, focus, defensive. are all part of:


4. STRATEGIES that concentrate on: existing markets, new market development, new product development, innovation based on existing resources, buying direct competitors, joint ventures, vertical integration, buying synergistic businesses, are ALL:

a. product/market strategiesb. competitive strategiesc. corporate missionsd. visions of nobility

5. In practice, corporate stakeholders are mainly:



a. vision, mission, people, actionb. view, mission, propositioning, actionc. vision, mission, positioning, actiond. vision, mission positioning, alternatives

7. The corporate strategy TOOL for: what the future holds; what are the anticipated regulatory, competitive, economic and geo-political environments in which the company must compete, is called a:

a. studyb. missionc. researchd. view


a. marketingb. strategicc. philosophicald. traffic


a. Technology alone no longer satisfies the customers; it is merely the entrance

ticket to the game.b. Every competitor has a different level of technology, and yet must distinguish

itself.c. Every customer's needs must be identified to ensure a quantity in

product/service/design which gets to the every possible market as fast as possible.

d. Product life cycles are longer.

10. A strategic VISION has all of these steps EXCEPT:

a. controlling employee successb. empowering subordinates with authorityc. credibility and responsibilityd. creating meaning through technology

11. Flexible companies do NOT need:


12. Effective VISIONS must NOT be:

a. simple, clear and yet make sense in the marketplaceb. preached once for allc. stable, but constantly challengedd. the result of a long process of reshaping and clarification

13. A "noble purpose" VISION does NOT appeal to people's desire to be:

a. aristocraticb. usefulc. proud of what they dod. excellent

14. VISIONS give effective leadership a shared sense of direction provided the vision does all of the following, EXCEPT:

a. has a noble purposeb. ensures a sense of urgency to act differentlyc. draws clear boundaries to change things d. not involve everybody in the company.

15. Only when we ask "what business are we in?" can we figure out

a. All of theseb. The competitors we must confrontc. The resources we need to master in order to ensure excellenced. The customer "wants" we could serve

cadab cdbaa dbada

Unit 2

16. Identifying competitive ARENAS and sources of competitive ADVANTAGE, leads to development of corporate:


17. POSITIONING enables development of:


18. A statement of: what role will achieve vision, what needs does it wish to satisfy, in what markets, with what products/services, against which competitors, and how to measure its success, is a corporate:

a. vision statementb. mission statementc. product/market strategyd. competitive strategy





21. Dividing a market up on the basis of similar characteristics so that investment can be made where it will be most effective in establishing a competitive advantage, is:



a. market analysisb. market segmentationc. divorced. marketing mix

23. Visions that awake extraordinary performance have three things in common:

a. profitability, urgency, ethicsb. noble purpose, urgency, clear boundaries.c. noble purpose, environmental concern, urgencyd. some female intuition

24. A SWOT analysis stands for:

a. strengths, weaknesses, opportunities, threatsb. sex, weaknesses, objectives, dangersc. strengths, weaknesses, objectives, destinyd. sources, weaknesses, objectives, dangers

25. To understand competitor strategy. strengths and weaknesses, do all the following, EXCEPT:

a. Identify opportunities and threats that require response.b. identify strategic questions that need to be monitored over time.c. Forecast accurately the key competitor reactionsd. Gain inside information on competitor future strategies.

26. Competitive ADVANTAGE that is SUSTAINABLE does NOT depend upon:

a. The way we compete - product strategy, positioning, pricing and manufacturing.

b. Who we compete against - selection of competitorsc. Where we compete - selection of markets that value the strategyd. Mainly price competition

27. "The CORPORATE MISSION satisfies a customer need by supplying a mix of goods and services, in an industry with known competitors". This statement is:

a. Trueb. Usually not truec. Theoreticald. Only applicable to developed countries

28. REPUTATION includes are all of the following, EXCEPT:

a. quality of management, products and servicesb. innovativenessc. short term investment valued. ability to attract and develop the right people

29. SUSTAINABLE COMPETITIVE ADVANTAGE, depends upon all of the following, EXCEPT:

a. mainly the price basis of competitionb. the way we compete - strategy for products, positioning, pricing and

manufacturing.c. where we compete - selection of markets that value the strategyd. who we compete against - selection of competitors

30. Corporate OBJECTIVES may vary but usually include:

a. cultural valuesb. ethical valuesc. environmental concernd. profitability, growth and market share (survival)

bcbbd babad dacad

Unit 3

31. A COMPETITIVE STRATEGY involving: special product lines that target a special market segment or limited specific geographical area. etc is known as strategic:


32. A COMPETITIVE STRATEGY involving: experience curve payoffs, no-frills products, product special design, raw-material sourcing, low-cost distribution, lowering labor costs, government subsidies, location changes, production innovations, buying competitors, automation, reducing overheads etc. is usually:

a. profitableb. unprofitablec. a low cost strategic thrustd. racist

33. The most critical part of COMPETITIVE ANALYSIS is usually:


34. The PRODUCT LIFE CYCLE has all of the following phases, EXCEPT:

a. introductionb. strategic renewalc. saturation and declined. growth and maturity

35. SEGMENTATION is necessary in each of these cases, EXCEPT:

a. groups of customers are looking for different things in a product or serviceb. there are sufficient numbers of these customersc. these customers cannot be identified or reachedd. the customer group is likely to be profitable

36. SEGMENTATION in industrial markets includes all of the following, EXCEPT:

a. dividing the market by geography, size, industry, application etc.b. allowing a company to exploit its resources better by selecting compatible

customers. c. allowing more sharply focused strategies. d. developing customer loyalty against many firms offerings that are geared to

that market.

37. SEGMENTATION in consumer markets, includes all of the following, EXCEPT:

a. something elseb. demographic - Age, sex, family size, family life cycle, income, occupation,

education, religion, nationalityc. psychographic - Social class, personality, interests, attitudes, values,

lifestyles, opinions, orientationsd. geographic - Region, country, city, area

38. With unprecedented global competition, COMPETITIVE ADVANTAGE must:

a. focus mainly on new customersb. be worked on all the timec. avoid opportunities from gaps between buyer expectations and supplier

performanced. identify markets segments where the competitors are best able to create

superior value.

39. POSITIONING is ALL EXCEPT:

a. a strategic issue - the first element of any marketing strategy aimed at a target market.

b. a poor guide to the development and execution of the total marketing strategy

c. based upon a "vision" of what the company wants to be and how it wants to be perceived by its stake holders

d. a statement about how the company/brand WANTS to be "seen" on the market place

40. POSITIONING is all of the following EXCEPT:

a. what is in the minds of customersb. the net result of the interaction of all the experiences, beliefs, feelings,

knowledge and impressions that the market has accumulated about that company.

c. "owned" by the company in the market placed. based on purely objective criteria

41. Your POSITION in the minds of your customers is NOT strong if they:

a. Understand what makes your product or service special b. Feel strongly about your brand that but will not defend it - at a higher price -

when it comes under attackc. Value your brand so much that they are willing to pay more for whatever

makes it speciald. Understand your product or service well enough to describe it clearly

42. COMPETITIVE STRATEGY achieves a SUSTAINABLE COMPETITIVE ADVANTAGE in its chosen product markets, with a variety of strategic thrusts, including:

a. focusb. all of thesec. product differentiationd. overall cost leadership

43. FOCUS in competitive strategy, relates to all of the following except:

a. cost leadership and/or differentiation of products/services in a broad market.b. target to a special market segmentc. limit to a specific geographical aread. special product line

44. The product life cycle has five phases: introduction, growth, maturity, saturation and decline. Which phase has these characteristics:


a. introductionb. saturationc. declined. disaster

45. PRODUCT DIFFERENTIATION goes with:

a complexityb. servicesc. positioning and segmentationd. price

bccbc dabbd bbabc

Unit 4

46. STRATEGIC CONCENTRATION on existing markets, new market development, new product development, innovation based on existing resources, buying direct competitors, joint ventures, vertical integration, buying synergistic businesses etc. are all part of:

a. competitive strategyb. corporate missionc. positioningd. product/market strategy

47. PRODUCT/MARKET STRATEGY with concentration on current business with single market/technology activity, usually results in:

a. moderate risk; slow growth; narrow range of investment options; normal profit.

b. low risk; slow growth; high profit.c. low risk; slow growth; low profit.d. high risk for R&D and pre-marketing cost; very high initial profits; difficult to

achieve long-term success.

48. Product/market strategy to buy competitors in the same stage of the production/marketing chain, eliminate competitors, get higher market share, improve economics of scale, is an example of product/market strategy for:

a. conglomerate diversificationb. vertical integrationc. horizontal integrationd. immoral purposes

49. Buying suppliers or customers, with increased dependability of supply and production volumes; financial risk from restriction to one industry, is an example of product/market strategy for:

a. horizontal integrationb. vertical integrationc. concentric diversificationd. retrenchment turn around

50. Buying companies with similar products/markets or different product/markets, in order to achieve some other form of SYNERGY and competitive advantage, which provides new technology, markets, products and resources; high, growth profitability and risk, is an example of product/market strategy for:

a. horizontal integrationb. concentric diversificationc. vertical integrationd. retrenchment turn around.

51. Concentrated effort in a crisis period of company decline (evidenced by cash shortage), to gain time and retain and strengthen basic market competencies, with top management changes; cost reduction; asset reduction; product/market synergies less significant that immediate survival of the organization,is an example of product/market strategy for:

a. horizontal integrationb. vertical integrationc. retrenchment turn aroundd. concentric diversification

52. Strategic marketing has all of these interacting components, EXCEPT:

a. corporate missionb. product/market strategyc. marketing mix - PPPPd. competitive strategy.

53. Overall cost leadership may arise from:

a. All of the theseb. Product special design c. Raw-material sourcingd. Lower costs than rivals

54. COMMUNALITY in operations for: distribution, image and market impact, sales and advertising effort, plant usage, R&D effort, operating costs, raw material purchasing, up stream purchasing, is an example of a competitive strategic thrust that is:

a. competitive scopeb. overall cost leadershipc. synergisticd. seductive

55. STRATEGIC SUPPLY SYSTEMS that secure access to raw materials, get priority for production equipment, dominate supply logistics. is an example of a competitive strategic thrust that is:

a. synergisticb. overall cost leadershipc. competitive scoped. pre-emptive

56. To compete with products/services in markets, use all of the following, EXCEPT:

a. Concentrating on existing markets/productsb. Innovation based on existing resourcesc. Buying indirect competitorsd. New market/product development

57. To achieve MARKET DEVELOPMENT by selling present products in new markets, the usual options include all, EXCEPT:

a. New product development for present markets. b. Attract other market segments, by developing new appealing product versions,

and using other distribution channels and promoting though other media.c. Open additional geographical markets, by regional, national and international

expansion.d. Massive advertising campaigns for the new markets

58. STRATEGIC Implementation is all of the following, EXCEPT:

a. A highly social activity, since we have to work though people.b. A highly emotional activityc. Changing people's behavior and value systems.d. A strictly objective professional work

59. Common causes for STRATEGIC IMPLEMENTATION PROBLEMS are all of the following, EXCEPT:

a. Training and instructions for lower management levels not adequate.b. Major unforseen problems arosec. Coordination of implementation not efficient enoughd. Took shorter time than anticipated

60. Product/market strategies from JOINT VENTURES usually result in:

a. low risk; slow growth; normal profit.b. high risk for R&D and pre-marketing cost; very high initial profits; difficult to

achieve long-term success.c. taking a chance or going underd. moderate risk; faster growth, improved profit.

dbcbb cdacd caddb

QUIZ ANSWER SHEET

1 C 26 D 51 C 2 A 27 A 52 C 3 D 28 C 53 A 4 A 29 A 54 C 5 B 30 D 55 D

6 C 31 B 56 C 7 D 32 C 57 A 8 B 33 C 58 D 9 A 34 B 59 D10 A 35 C 60 D

11 D 36 D12 B 37 A13 A 38 B14 D 39 D15 A 40 D

16 B 41 B17 C 42 B18 B 43 A19 C 44 B20 D 45 C

21 B 46 D22 A 47 A23 B 48 C24 A 49 B25 D 50 B

Note: ... one of these answers may be wrong ... ... you can decide which one it is ... ... but only if you can convince your whole SG ...

GUIDE TO THE CASES

UNIT I

ASSIGNMENT 6.0 LECTURE - CIBA-GEIGY A1

6.1 STORY OF THE CASE

a. CG is a large, highly centralized, global corporation presenting an interesting example of one company's innovative approach to making internal services, formerly highly controlled and bureaucratized, more market oriented.

b. Internal services were taken out of the highly controlled and bureaucratized system, and put into four categories: "still highly centralized, totally decentralized, partly independent, totally independent".

c. At one extreme, such services as Finance & Control, Legal, and R&D remained centrally organized, either because of their strategic importance to the company or simply because it made little economic sense for them to operate freely in an open market.

d. The only unit empowered to become fully independent was Communication Services, which acquired the name Allcomm. This unit was allowed to compete both for CG and third party business, and to generate its own profits. Most importantly, the company was now free to pick and choose its customers, and use market prices to charge for its services.

e. The object? Twofold: use Allcomm as a role model, and turn an overhead into a profit generating unit.

f. The 150 employees at Allcomm, who had been used to dealing almost exclusively with their captive-market colleagues at Ciba-Geigy, now had to change their thinking and behavior.

g. Jurg Chresta, the newly-appointed CEO, was to manage this internal change process. He also had to make some major decisions concerning which clients to select, as well as the extent and nature of Allcomm's relationship with Ciba-Geigy.

g. The challenge in the case is to develop a new strategy for Allcomm using the VPMA concept.

6.2 WHY DID CG TOP MANAGEMENT WANT TO CHANGE?

a. CG's top management saw that the only way to make the company more efficient and competitive under increasingly tight global market conditions was to change its structure radically.

b. The objective was to engender a competitive, market-driven atmosphere throughout the company.

6.3 WHAT WAS THE TRADITIONAL CG APPROACH TO MANAGING SERVICES?

a. Prior to the reorganization, the Central Functions dictated and performed many of the internal service activities.

b. The operating divisions and regions had no choice: when it came to these 11 services, they were obliged to take whatever services and people the Central Functions sent to them. As some employees commented in retrospect, the system resembled that of a centralized economy in many ways: the service provider dictated to the user which services had to be purchased, the number and the price. The barrage of paper and form filling which existed between the providers and users created service vacuums which stymied ideas and creativity, and lowered morale.

c. The direct expenses of the services which the Central Functions provided, as well as a percentage of the overhead, were allocated to the divisions regardless of whether or not a service had been requested or used. Moreover, divisions and business units could not control costs since they did not know where the costs were coming from, nor did they know the value of the services they were receiving.

d. The essence of the structure was on control and on covering the costs which were incurred. Sometimes, these costs were allocated regardless of whether the services had been requested or used.

e. The overall effect was that providers were "divorced" from users: they were unaware of the users' real needs, and users were not only unable to communicate directly with providers, they did not even know what they could ask for.

f. The net result was that Ciba-Geigy risked losing its competitive edge in the marketplace.

6.4 WHICH INTERNAL SERVICES COULD BE EXTERNALLY COMPETITIVE?

a. CG's top management used a model consisting of four categories of services: centralized, decentralized, partly independent, fully independent.

b. Irrespective of the structure and the categories into which different services may fall, all internal services should be geared so that they are responsive to user needs and thus more effective in terms of the end market results.

c. Potentially competitive services were: four factories, engineering and process technology, research, information systems, personnel, administration of pension funds/real estate, purchasing and communications.

6.5 SUGGEST THREE ALTERNATIVE VISIONS FOR ALLCOMM

a. The important question for Allcomm is what market to choose for the 50% of its potential business. It has a reputation in Switzerland and in pharmaceutical, but the market is restricted.

b. Alternative visions include:

1. An advertising agency locking in all CG business and concentrating on remaining an retain their sole support.

2. A safe workplace living in the CG employment atmosphere with a predictable reliable future until top management changes.

3. An alliance with another non-competing agency which will supply the non-CG business.

c. Should it expand internationally? This will give Allcomm growth potential and obviate the problem of eventually competing head on with Ciba-Geigy. And, since many customers have global operations, international presence is demanded in any case.

6.6 FOR JURG CHRESTA, DESIGN AND JUSTIFY A BRIEF VISION STATEMENT FOR ALLCOMM FOR THE NEXT FIVE YEARS

a. Allcomm can be a leading profitable communications center serving a wide variety of clients apart from CG.

b. Allcomm can provide customers with a state-of-the-art solutions and services to all their international communication challenges.

c. Allcomm can be a company with an exciting and stimulating workplace.

6.7 LEARNING POINTS

a. Competitive arenas analysis can indicate where the company will compete in the future and the sources of competitive advantage?

b. Competitive advantage analysis must focus on customers, consider market segments with similar needs/wants, seek opportunities from gaps between buyer expectations and supplier performance, find gaps by comparing company/competitive capabilities to buyer needs, identify markets segments where the company is best able to create superior value, compared with competitors.

c. A corporate mission statement clarifies the role the company will seek to play in order to achieve its vision: what needs does it wish to satisfy in which markets with what products/services against which competitors and how will it measure its success i.e what objectives are and how is their achievement to be measured.

d. The ultimate driver for all successful strategies is the motivation of the staff.

e. Implementing change with a new strategy, involves changing and focussing people's outlook and behavior.

d. Different people have different levels of willingness to accept and to "own" change, as well as different time frames in which it can take place.

e. Although a strategy of selling more of existing products/services in existing markets is more predictable in its outcome, the results are rarely very high.

f. To achieve higher growth a company must sell existing and new products in new markets.

g. A sustainable competitive advantage must be substantial enough to make a difference, sustainable against environmental change and competitor action, and be capable of being developed into visible business attributes that influence customers.


insert


(a)Re-assemble in CSG

(b)Study carefully the lecture on the case

(c)Record key learning points in your notebook

(d)Discuss outstanding questions

(e)When the bell rings it is time for lunch

GUIDE TO THE CASES

UNIT II

ASSIGNMENT 10.0 - LECTURE ON CIBA-GEIGY A2

10.1 VISION STATEMENT AND WHAT THE FUTURE HOLDS - EVALUATION

a. To meet CG's new expectations, Allcomm must demonstrate its expertise, creativity, motivation and flexibility.

b. Allcom can only establish the necessary credibility with CG if it is perceived as successful competitor outside the CG environment.

c. Allcomm's critical advantage will always be the performance of its staff. Therefor Jurg Chresta must retain and develop his colleagues to their full potential.

10.2 DISCUSS ALTERNATIVE PRODUCT/SERVICE MARKET ARENAS FOR ALLCOMM

a. Overall, the objective is clear: internal services have to become more customer oriented. In other words, CG must move to a freer market-driven structure.

b. Allcomm and other services which have become partly or totally independent would have to make radical changes to their strategies and cultures for this to happen.

c. Specifically, Allcomm and Jurg Chresta have several challenges: how to put Allcomm in the open market, and to resolve whether or not to continue to rely on CG as the major customer.

d. The important question for Allcomm is what market to choose for the 50% of its potential business. It has a reputation in Switzerland and in pharmaceutical, but the market is restricted. Should it expand internationally? This will give Allcomm growth potential and obviate the problem of eventually competing head on with Ciba-Geigy. And, since many customers have global operations, international presence is demanded in any case.

e. Options include: pharmaceutical or other industries, and domestic or international business.

f. When the case begins in 1989, 2-3% of Allcomm's costs are already being covered by outside customers. We don't know who they are, but we can assume that they are in non-competing pharmaceutical, and are in and around Switzerland. Ideally, Allcomm wants Ciba-Geigy to account for 50% of total revenues.

g. CEO has made other resolutions: to move the company from an advertising unit to a communications center; to provide customers with solutions and results; to expand beyond pharmaceutical. Accomplishing this will require developing new capabilities, together with some very important decisions, such as: what services to offer; how to organize, evaluate, cost and price.

10.3 IDENTIFY ALLCOMM'S COMPETITIVE ADVANTAGES/DISADVANTAGES

a. Allcomm does have the expertise in the pharmaceutical industry. Relationships have been built up for several years between Ciba-Geigy clients and Allcomm employees. But what about other industries? And providing total solutions? Clearly, if Allcomm opts to expand either into new sectors and into solutions rather than traditional advertising services, it will need more/different people.

b. CG has guaranteed that it will use Allcomm's services for three years; by continuing to prioritize this relationship, Allcomm can be assured of a gross income in its first year of independent operation equal to 100% of its previous year's earnings, 90% the following year and 80% the third year.

But, the downsides are:

Restricting its client base to CG alone could be risky since these colleagues, now having to pay full market prices, have become more demanding and have begun exploring the possibility of using outside advertising agencies.

c. Keeping close to CG could also inhibit the change process to a more competitive culture. Not all staff are reacting to the change with equal enthusiasm; while some want to move as quickly as possible, others are still resisting.

d. The 150 employees at Allcomm, who had been used to dealing almost exclusively with their captive-market colleagues at CG, now had to change their thinking and behavior.

e. At the moment, there is little unanimity amongst Chresta's staff, which is to be expected since many had initially joined in order to be part of a large conservative corporation. The figures in the case substantiate the divergence of opinion amongst Allcomm's employees. 40% of the staff share Chresta's views and will help him drive the change. If handled correctly, the remaining 40% are probably going to be followers.

f. The CEO, has to manage this internal change process. He also had to make some major decisions concerning which clients to select, as well as the extent and nature of Allcomm's relationship with Ciba-Geigy.

10.4WHAT IS THE BEST PACE OF CHANGE?

a. Some will say that, by moving more quickly, Chresta will please and encourage the innovative and ambitious employees. On the other hand, the right skills, structure and system have to be in place first if high quality, creative services are to be delivered. Lacking that, the risk is failure.

b. Others will say that, if he goes too slowly, he may dilute the enthusiasm associated with the change, miss opportunities and literally lose his most creative people.

10.5FOR JURG CHRESTA, DESIGN AND JUSTIFY A BRIEF ALLCOMM CORPORATE MISSION STATEMENT FOR THE NEXT FIVE YEARS





10.6 LEARNING POINTS










10.7LEARNING PATTERNS

insert


a. Re-assemble in CSG

b. Study carefully the lecture on the case

c. Record key learning points in your notebook

d. Discuss outstanding questions

e. Reassemble in MG when the bell rings

GUIDE TO THE CASES

UNIT III

ASSIGNMENT 5.0 LECTURE - CIBA-GEIGY B1


a. The (B) Case opens in September 1992, and tracks the firm's progress after almost one and half years as an independent unit.

b. By the end of fiscal year 1991, Allcomm has a total operating turnover of SF 20.2 million and has made a profit of SF 38,706. This figure exceeds the original expectations that Allcomm would only break even by the end of fiscal year 1992.

c. Of its 3,800 customers, 10% were external non-Ciba-Geigy clients. Because these 380 customers contributed about 15% to the operating turnover, Allcomm did not have to use the entire SF 3 million turnover guarantee accorded to it by Ciba-Geigy.

d. Achieving these results meant taking some risks and rethinking Allcomm strategy: where it would do business, what it does well, how it is organized, and how it would define success and make money.

5.2 EVALUATE THE CORPORATE MISSION STATEMENT

a. The CEO was faced with a time constraint in developing the corporate strategy. He has to ensure that Allcomm is profitable before the CG support runs out in three years.

b. The corporate mission statement is developed to increase the short term chances of success, yet a the same time, he must build up a meaningful future for Allcomm.

5.3 HOW SHOULD ALLCOMM POSITION ITSELF

a. As a complete communication agency where customers receive the most modern and effective services.

b. For CG customers Allcomm should be perceived as part of the group; but yet better and more effective than the outside competition.

c. For outside customers Allcomm should be seen as one of the leading communication agencies, comparable to the very best, and definite one for companies that seek the best.

5.4 WHAT ARE SOME OF THE PARADOXES THAT FACE ALLCOMM?

a. There are certain paradoxes which Chresta must deal with:

how to give people more time for customers but, at the same time, ensure that they are cost effective;

how to be flexible in pricing, but ensure that everyone knows exactly what is expected of them;

how to give groups freedom but, at the same time, make time budgets rigorous so as to control costs;

how to create a feeling of security and, at the same time, engender the firm with a strong sense of urgency;

how to make people into specialists but, at the same time, produce a generalist approach to customers--ready to solve their problems;

how to make people into team players, but develop leadership qualities in them as well and retain individuality;

how to collaborate and compete (differentiate) at the same time;

b. Allcomm must learn how to keep Ciba-Geigy happy by knowing its business even better and, at the same time, find new clients in other industries;

c. Allcomm must learn how to manage people of different cultures simultaneously--those in the 20%, the more innovative risk takers, and the more traditional types.

5.5 DESIGN AND JUSTIFY A "COMPETITIVE STRATEGY STATEMENT FOR ALLCOMM


b. This will enable delivery of services to CG in a way that is unique. Naturally for the CG market, Allcomm will focus on the each company in such a way that Allcomm is regarded as particularly qualified to handle CG company problems.



5.6 LEARNING POINTS

a. We cannot move from vision to action without giving sufficient thought to mission and positioning.

b. Competitive strategies are directly related to mission and positioning.

c. Final determinate of the competitive strategies is the of "Competitive Advantages", and the selection of s

pecific advantages to be exploited.

d. Most competitive strategies are not one single factor e.g. price, but a combination several factors.

e. Captive markets may prove a disadvantage in the long term when customer focus is called for.

f. Globalizing service operations is probably no longer an option: it is a necessity, requiring alliances with the correct partners and strong coordination.

g. To be profitable in services, it's important to manage capacity and attain "economies of know-how".


insert


(a) Reassemble in CSG

(b) Study the lecture on the case and resolve outstanding questions



GUIDE TO THE CASES

UNIT IV

ASSIGNMENT 10.0 - LECTURE - CIBA-GEIGY B2 (30 MINUTES)


See your flip chart for new perceptions/ideas. (hopefully).

10.2 EVALUATE THE COMPETITIVE STRATEGY STATEMENT

a. Allcomm re-assured CG that they would not be losing out by continuing to use Allcomm's differentiated services, from what they were before.

b. Allcomm delivers to CG what the CG companies felt was important, but in am unique a way as possible.

c. Allcomm also focussed on CG market by keeping Allcomm's special CG expertise and know how positioned. in the tight way.

d. Allcomm also extended its competitive scope by offering CG as wider range of services as possible.

e. For the outside clients, Allcomm used synergy by exploiting commonality of skills and resources needed for (with CG) and by the competitive scope and differentiation of the services.

10.3 IDENTIFY THE PRODUCT/MARKET STRATEGY ADOPTED BY ALLCOMM

a. Four distinct strategies:

1. Focus on selling more existing services to CG2. Focus on developing and selling new services for CG3. Focus on selling existing services to new clients4. Focus on developing and selling new services to new clients.

b. These strategies are ranked in order of unpredictability and potential payoff e.g. 1. is fairly but with a poor payoff.

10.5 WHAT ARE THE CRITICAL SUCCESS FACTORS THAT HAVE CONTRIBUTED TO THE ALLCOMM CHANGE PROCESS?

a. So far, the company has accomplished several things, both internally with Ciba-Geigy and externally in the market.

1. Internally, Allcomm has successfully demonstrated its expertise, creativity, motivation and flexibility to carry out Ciba-Geigy's new logo campaign worldwide. Convincing the chemical company of this, however, proved much harder than expected.

2. Externally in the market, 15% of its customers are non-Ciba Geigy clients. Allcomm has also signed up accounts in areas far removed from chemicals: a beer company, a humanitarian organization, a fashion company and, potentially, a leading European automobile manufacturer.

b. To a large extent, the success so far has been due to Chresta's willingness to do things differently and take risks:

1. He formed the experimental team, a group of innovative people, in order to use them as a role model. A self-managed unit, they have successfully concentrated on getting new business outside Allcomm's traditional industries.

2. He used the "diffusion concept" to get a new culture into Allcomm since he never believed that everyone would change at the same pace. Now, he intends to use the formula in the whole advertising department, which means that the new culture will extend to 20% of Allcomm's workforce.

c. But, learning from his mistakes, Chresta will provide them with administrative backup.

d. He has spent a lot of time on teaming and on eliminating the structural and hierarchic al barriers which got in the way of effective teamwork and learning, and impeded close customer relationships. Chresta did this in several ways:

1. Teams, rather than individuals, have been grouped and identified;

2. The team is now regarded as the hero and is rewarded accordingly;

3. He has got rid of job titles, which meant more internally than they did to customers,

4. He has eliminated the rules and regulations so that people could get on with the job of finding, satisfying and retaining customers;

5. He now allows people to own shares in the company--almost 70% of Allcomm's employees have these shares;

6. He allows teams to self-manage by empowering them to get on with what needs to be done, to form their own culture, values and, even, behavior.

7. He understood and has practiced the dynamics of changing people over time.

e. All these moves were intended to encourage more experimentation, risk taking, and entrepreneurship amongst employees in a culture previously riddled with control and rules.

f. Whereas the earlier organizational structure inevitably led to an upwardly and inwardly focussed culture.

This de─layered flatter organization, which encouraged horizontal rather than vertical relationships, was intended to get people to work together and focus on the customer.

10.6 WHAT ARE THE CHALLENGES THAT ALLCOMM NOW FACES?

a. Although Allcomm has experienced unexpectedly good performance, it still must make some critical decisions in key areas. Firstly, it must decide how it wants to react to the Customer Satisfaction Survey and the Employee Satisfaction Survey.

b. Customer Satisfaction Survey - While almost 80% of the customers surveyed are satisfied with Allcomm's performance, the negative evaluations share a common source: too much of the Ciba-Geigy culture still pervades at Allcomm, hampering real customer satisfaction.

c. Employee Satisfaction Survey - Some of the responses in the Employee Satisfaction Survey appear to support the viewpoint that too much of the "old" culture still exists at Allcomm. As Exhibit 3 illustrates, relative employee dissatisfaction exists in two areas:

1. Cooperation amongst business units (only 66.7% agree that it exists);

2. Channels of communication between management and employees (only 62.8% feel that such channels are working).

In both instances, the percentage of employees who fully agree that cooperation is good and that effective channels of communication exist is much less still.

d. Allcomm must also resolve several other issues:

1. What customers to aim for in the future2. Which services to offer so as to provide a solution to

customers;3. Who should do what (make or buy); and,4. How to assess profitability.

e. Clearly, long-term relationships and solutions will mean closer working ties to fewer customers. But, Chresta has to decide what markets (industries) and countries to concentrate on. As for going global, there is no option, as his customers are demanding it. But, how to go about it? Retaining control of quality and customer contact will be a critical challenge.

f. How many services to offer will ultimately depend on the solution package needed by Allcomm's respective markets.

Then, the issue is: does the company perform all the services itself, or buy some from outside?

g. Regardless of the decision, the issue is one of capacity management--either Allcomm provides its people with new and multiple skills, or it forms alliances with third parties (including competitors), which can provide capacity either more cheaply or at peak times.

h. One unresolved problem is how to make the services profitable. As yet, Allcomm's management does not know the true costs of its services, and pricing is still made on the basis of "labor hours" spent.

Somehow, it will have to get a better handle on costs and begin to price on value.

Equally important, Allcomm will, as the case suggests, have to have a flexible system which enables it to respond to the individual needs of users.

Video: the 10─minute video interview with Jurg Chresta provides an interesting insight into the CEO's use of the experimental group, why he intends to use them as a role model, and some general learning on how the process was managed.


a. Competitive strategies have to be based on competitive advantage.

b. It is usually necessary to have several competitive strategies at the same time.

c. One competitive strategy does not work as well as several in a product market. Thus for more that one product/market, several competitive strategies are needed.

d. The time needed to implement different competitive strategies, as well as their pay-off time, will vary extensively.

e. The change process takes time as it must work through the various categories of employees.

f. Providing solutions means getting people to work effectively in teams. The team becomes the core value-creating unit: it has to be chosen, evaluated and rewarded accordingly.

g. Solution providers need time with customers. This has to be taken into account in pricing strategies. Flexible pricing--i.e., bundling and unbundling--gives firms the options they need to provide different customers with individualized solutions.

h. Captive markets may prove a disadvantage in the long term when customer focus is called for.

i. Globalizing service operations is probably no longer an option: it is a necessity, requiring alliances with the correct partners and strong coordination.

j. To be profitable in services, it's important to manage capacity and attain "economies of know-how".


insert






AGLSTDIARYDRAFT/12.12.93


STANDARD COURSE DIARY(Retained)

NAME ......................................

Copyright:


94

INDEX

Item Page No

1. Important note on the learning 3

2. Registration sheet 4

3. Quiz answer sheets 6

4. First feedback summary 8

5. Action plan for the future 10 6. Second feedback summary 11

7. Daily learning summary sheets 14

Appendices:

A. Optional exercises

B. Diagnostic instruments

C. Further readings

D. Some ideas to think about

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1. - IMPORTANT NOTE ON THE LEARNING

1. AGL is specially designed as an intensive basic strategy course, for the manager with relatively little or no formal strategic training or experience. Some parts may be less challenging for the manager with many years of experience.

2. AGL creates a very special group learning environment that is new to the group members. It is a highly effective but rather challenging learning experience. Members should therefore try to keep an open mind on their reactions until the second day of the program.

3. Members can and do solve ALL the problems and answer ALL the questions, from the special materials provided and the experience of other members of the group.

4. The Organizer is not a teacher. The Organizer's job is to help members to:

a. Understand the AGL learning systemb. Use fully and effectively the special learning materials and the group experiences.c. Solve administrative problems

5. The Organizer is not usually allowed under AGL Learning Systems to respond directly to technical financial questions, since the learning is better when members help each other. The critical skill of the Organizer is to HELP the participants to WORK TOGETHER to resolve successfully, all questions arising. Thus by the end of the program EVERY QUESTION is resolved!

6. Since the same learning materials are used for both the two day and the three day versions of the course, the Organizer will occasionally outline differences in the timing of some parts of the work.

7. Since 1970 over 50,000 executives have successfully completed AGL programs throughout the world.

8. We hope you too will find AGL stimulating, efficient and effective for you!

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2. - REGISTRATION SHEET

PART I - BASIC DATA:

AGL:

Date and location:

Name:

Title:

Organization:

Address, telephone, fax:

PART II - PREVIOUS BACKGROUND

Please write 1-4 lines on your relevant training and experience in the subject area of the program.

PART III - OBJECTIVES

Please complete the attached sheet: "Learner Objective Setting".

List below three objectives in your taking the program.

1.

2.

3.

PART IV - QUIZ RESULTS

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LEARNER OBJECTIVE SETTING

1. Briefly, what is your idea of a working knowledge of the subject area?

2. Briefly describe a situation you faced in the last six months which involved the subject area. How did it arise? What did you do? What was the result? What did you feel?

3. Can you now list (below) 20 technical words, relevant to the subject area, that you need to use frequently?

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3. - QUIZ ANSWER SHEET Name: ...................................................

Mark each correct answer with a clear "X" 1. a b c d 26. a b c d 51. a b c d 76. a b c d

2. a b c d 27. a b c d 52. a b c d 77. a b c d













15. a b c d 40. a b c d 65.a b c d 90. a b c d










25. a b c d 50. a b c d 74. a b c d 100.a b c dScore: /100 Note of errors for correction later:

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3. - QUIZ ANSWER SHEET Name: ...................................................

Mark each correct answer with a clear "X"

























25. a b c d 50. a b c d 74. a b c d 100.a b c d

100

Score: /100 Note of errors for correction later:

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4. - FIRST FEEDBACK SUMMARY

1. BASIC DATA:

AGL:

Date and location:

Name of member:

Title:

Organization:

Address, telephone, fax:

2. BACKGROUND:

3. QUIZ RESULTS:

4. To what extent did you achieve your personal objectives? Did anything surprise you?

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5. Do you have any suggestions for improving the program?

6. What other programs might be useful to your company?

7. At this time , what is your overall evaluation of the program. in terms of content, presentation, administration and usefulness?

Excellent Very good Good Fair Poor

Content

Presentation

Administration

Usefulness

Note: Please score 1 (poor) to 5 (excellent)

8. Other comments:

Signature ................... date .............

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6. - ACTION PLAN FOR THE FUTURE

1. Readings?

2. Group discussion?

3. Publications?

4. Courses?

5. Reports?

6.

7.

8.

9.

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7. - SECOND FEEDBACK SUMMARY

1. Basic data:

AGL: Date and location:

Name of member:

Organization:

2. Did you complete the LRT work exactly as scheduled as on days 6, 12 and 24? Could you please explain your reactions and difficulties?

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3. For learning research, could you please indicate your reactions to the total AGL experience (circle YES or NO):

A1 Was enough guidance, briefing and helpprovided? YES NO

A2 Did the program stimulate you? YES NO

A3 Did you know the learning objectives beforeyou started? YES NO

A4 Do you think you achieved the learningobjectives? YES NO

A5 Would you choose to learn this way again? YES NO

A6 Were the materials practical and relevantto you? YES NO

B1 Were the technical difficulties and shorthanduseful in your learning? YES NO

B2 Would an experienced teacher have improvedthe learning environment? YES NO

B3 Did you find the materials too confusingat times? YES NO

B4 Were you a little embarrassed during thelearning experience? YES NO

B5 Did the constraints upset you? YES NO

B6 Did something disturb your learning? What was it? YES NO

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4. Have you actually used what you taught yourself in the AGL? Do you feel ready now for further training?

5. How "efficient" was the AGL learning (doing things right)? Please explain.

6. How "effective" was the AGL learning (doing the right things)? Please explain.

7. Thank you very much for giving us this second feedback data. Do you have any other helpful comments?

8. Would you kindly return this final feedback summary to the organizer on the 28th day after completion of the AGL program.

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8. - DAILY LEARNING SUMMARY SHEET

DAY 1

MAIN TOPIC:

SEVEN KEY LEARNING POINTS:

1.

2.

3.

4.

5.

6.

7.

THREE QUESTIONS UNANSWERED:

1.

2.

3.

GENERAL FEELINGS AND REACTIONS TO THE LEARNING ENVIRONMENT:

IDEAS TO FOLLOW UP IN THE FUTURE:

BLOCKS TO THE LEARNING:

OTHER COMMENTS:

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DAY 1

MAIN TOPIC:


1.

2.

3.

4.

5.

6.

7.


1.

2.

3.




OTHER COMMENTS:

109


DAY 1

MAIN TOPIC:


1.

2.

3.

4.

5.

6.

7.


1.

2.

3.




OTHER COMMENTS:

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APPENDIX A - OPTIONAL EXERCISES

INSERT

111

APPENDIX B - DIAGNOSTIC INSTRUMENTS

INSERT

112

APPENDIX C - FURTHER READINGS

INSERT

AGLSTGUDRAFT/12.12.93



GUIDE

To be used and handed back to the Organizer

Copyright:


113

QUIZ

Choose if possible the "most correct" answer and mark the answer sheet a, b, c, d with an "X". PLEASE DO NOT MARK THE QUIZ.

Unit 1

1. In developing corporate strategy, a view leads to a "vision" of:

a. what the future will beb. profitable marketsc. management's real objectives

d. positioning for the future

2. The beliefs, feelings, knowledge and impressions that the MARKET has accumulated about the company, is due to:

a. positioningb. strategic planningc. marketing focusd. luck

3. Overall cost leadership, differentiation, focus, defensive. are all part of:


4. STRATEGIES that concentrate on: existing markets, new market development, new product development, innovation based on existing resources, buying direct competitors, joint ventures, vertical integration, buying synergistic businesses, are ALL:

a. product/market strategiesb. competitive strategiesc. corporate missionsd. visions of nobility

5. In practice, corporate stakeholders are mainly:


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a. vision, mission, people, actionb. view, mission, propositioning, actionc. vision, mission, positioning, actiond. vision, mission positioning, alternatives

7. The corporate strategy TOOL for: what the future holds; what are the anticipated regulatory, competitive, economic and geo-political environments in which the company must compete, is called a:

a. studyb. missionc. researchd. view


a. marketingb. strategicc. philosophicald. traffic


a. Technology alone no longer satisfies the customers; it is merely the entrance ticket to the game.

b. Every competitor has a different level of technology, and yet must distinguish itself.c. Every customer's needs must be identified to ensure a quantity in

product/service/design which gets to the every possible market as fast as possible.d. Product life cycles are longer.

10. A strategic VISION has all of these steps EXCEPT:

a. controlling employee successb. empowering subordinates with authorityc. credibility and responsibilityd. creating meaning through technology

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11. Flexible companies do NOT need:


12. Effective VISIONS must NOT be:

a. simple, clear and yet make sense in the marketplaceb. preached once for allc. stable, but constantly challengedd. the result of a long process of reshaping and clarification

13. A "noble purpose" VISION does NOT appeal to people's desire to be:

a. aristocraticb. usefulc. proud of what they dod. excellent

14. VISIONS give effective leadership a shared sense of direction provided the vision does all of the following, EXCEPT:

a. has a noble purposeb. ensures a sense of urgency to act differentlyc. draws clear boundaries to change things d. not involve everybody in the company.

15. Only when we ask "what business are we in?" can we figure out

a. All of theseb. The competitors we must confrontc. The resources we need to master in order to ensure excellenced. The customer "wants" we could serve

cadab cdbaa dbada

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Unit 2

16. Identifying competitive ARENAS and sources of competitive ADVANTAGE, leads to development of corporate:


17. POSITIONING enables development of:


18. A statement of: what role will achieve vision, what needs does it wish to satisfy, in what markets, with what products/services, against which competitors, and how to measure its success, is a corporate:

a. vision statementb. mission statementc. product/market strategyd. competitive strategy





21. Dividing a market up on the basis of similar characteristics so that investment can be made where it will be most effective in establishing a competitive advantage, is:


117


a. market analysisb. market segmentationc. divorced. marketing mix

23. Visions that awake extraordinary performance have three things in common:

a. profitability, urgency, ethicsb. noble purpose, urgency, clear boundaries.c. noble purpose, environmental concern, urgencyd. some female intuition

24. A SWOT analysis stands for:

a. strengths, weaknesses, opportunities, threatsb. sex, weaknesses, objectives, dangersc. strengths, weaknesses, objectives, destinyd. sources, weaknesses, objectives, dangers

25. To understand competitor strategy. strengths and weaknesses, do all the following, EXCEPT:

a. Identify opportunities and threats that require response.b. identify strategic questions that need to be monitored over time.c. Forecast accurately the key competitor reactionsd. Gain inside information on competitor future strategies.

26. Competitive ADVANTAGE that is SUSTAINABLE does NOT depend upon:

a. The way we compete - product strategy, positioning, pricing and manufacturing.b. Who we compete against - selection of competitorsc. Where we compete - selection of markets that value the strategyd. Mainly price competition

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27. "The CORPORATE MISSION satisfies a customer need by supplying a mix of goods and services, in an industry with known competitors". This statement is:

a. Trueb. Usually not truec. Theoreticald. Only applicable to developed countries

28. REPUTATION includes are all of the following, EXCEPT:

a. quality of management, products and servicesb. innovativenessc. short term investment valued. ability to attract and develop the right people

29. SUSTAINABLE COMPETITIVE ADVANTAGE, depends upon all of the following, EXCEPT:

a. mainly the price basis of competitionb. the way we compete - strategy for products, positioning, pricing and

manufacturing.c. where we compete - selection of markets that value the strategyd. who we compete against - selection of competitors

30. Corporate OBJECTIVES may vary but usually include:

a. cultural valuesb. ethical valuesc. environmental concernd. profitability, growth and market share (survival)

bcbbd babad dacad

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Unit 3

31. A COMPETITIVE STRATEGY involving: special product lines that target a special market segment or limited specific geographical area. etc is known as strategic:


32. A COMPETITIVE STRATEGY involving: experience curve payoffs, no-frills products, product special design, raw-material sourcing, low-cost distribution, lowering labor costs, government subsidies, location changes, production innovations, buying competitors, automation, reducing overheads etc. is usually:

a. profitableb. unprofitablec. a low cost strategic thrustd. racist

33. The most critical part of COMPETITIVE ANALYSIS is usually:


34. The PRODUCT LIFE CYCLE has all of the following phases, EXCEPT:

a. introductionb. strategic renewalc. saturation and declined. growth and maturity

35. SEGMENTATION is necessary in each of these cases, EXCEPT:

a. groups of customers are looking for different things in a product or serviceb. there are sufficient numbers of these customersc. these customers cannot be identified or reachedd. the customer group is likely to be profitable

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36. SEGMENTATION in industrial markets includes all of the following, EXCEPT:

a. dividing the market by geography, size, industry, application etc.b. allowing a company to exploit its resources better by selecting compatible

customers. c. allowing more sharply focused strategies. d. developing customer loyalty against many firms offerings that are geared to that

market.

37. SEGMENTATION in consumer markets, includes all of the following, EXCEPT:

a. something elseb. demographic - Age, sex, family size, family life cycle, income, occupation,

education, religion, nationalityc. psychographic - Social class, personality, interests, attitudes, values, lifestyles,

opinions, orientationsd. geographic - Region, country, city, area

38. With unprecedented global competition, COMPETITIVE ADVANTAGE must:

a. focus mainly on new customersb. be worked on all the timec. avoid opportunities from gaps between buyer expectations and supplier

performanced. identify markets segments where the competitors are best able to create superior

value.

39. POSITIONING is ALL EXCEPT:

a. a strategic issue - the first element of any marketing strategy aimed at a target market.

b. a poor guide to the development and execution of the total marketing strategyc. based upon a "vision" of what the company wants to be and how it wants to be

perceived by its stake holdersd. a statement about how the company/brand WANTS to be "seen" on the market

place

40. POSITIONING is all of the following EXCEPT:

a. what is in the minds of customersb. the net result of the interaction of all the experiences, beliefs, feelings, knowledge

and impressions that the market has accumulated about that company.c. "owned" by the company in the market placed. based on purely objective criteria

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41. Your POSITION in the minds of your customers is NOT strong if they:

a. Understand what makes your product or service special b. Feel strongly about your brand that but will not defend it - at a higher price - when

it comes under attackc. Value your brand so much that they are willing to pay more for whatever makes it

speciald. Understand your product or service well enough to describe it clearly

42. COMPETITIVE STRATEGY achieves a SUSTAINABLE COMPETITIVE ADVANTAGE in its chosen product markets, with a variety of strategic thrusts, including:

a. focusb. all of thesec. product differentiationd. overall cost leadership

43. FOCUS in competitive strategy, relates to all of the following except:

a. cost leadership and/or differentiation of products/services in a broad market.b. target to a special market segmentc. limit to a specific geographical aread. special product line

44. The product life cycle has five phases: introduction, growth, maturity, saturation and decline. Which phase has these characteristics:


a. introductionb. saturationc. declined. disaster

45. PRODUCT DIFFERENTIATION goes with:

a complexityb. servicesc. positioning and segmentationd. price

bccbc dabbd bbabc

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Unit 4

46. STRATEGIC CONCENTRATION on existing markets, new market development, new product development, innovation based on existing resources, buying direct competitors, joint ventures, vertical integration, buying synergistic businesses etc. are all part of:

a. competitive strategyb. corporate missionc. positioningd. product/market strategy

47. PRODUCT/MARKET STRATEGY with concentration on current business with single market/technology activity, usually results in:

a. moderate risk; slow growth; narrow range of investment options; normal profit.b. low risk; slow growth; high profit.c. low risk; slow growth; low profit.d. high risk for R&D and pre-marketing cost; very high initial profits; difficult to achieve

long-term success.

48. Product/market strategy to buy competitors in the same stage of the production/marketing chain, eliminate competitors, get higher market share, improve economics of scale, is an example of product/market strategy for:

a. conglomerate diversificationb. vertical integrationc. horizontal integrationd. immoral purposes

49. Buying suppliers or customers, with increased dependability of supply and production volumes; financial risk from restriction to one industry, is an example of product/market strategy for:

a. horizontal integrationb. vertical integrationc. concentric diversificationd. retrenchment turn around

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50. Buying companies with similar products/markets or different product/markets, in order to achieve some other form of SYNERGY and competitive advantage, which provides new technology, markets, products and resources; high, growth profitability and risk, is an example of product/market strategy for:

a. horizontal integrationb. concentric diversificationc. vertical integrationd. retrenchment turn around.

51. Concentrated effort in a crisis period of company decline (evidenced by cash shortage), to gain time and retain and strengthen basic market competencies, with top management changes; cost reduction; asset reduction; product/market synergies less significant that immediate survival of the organization,is an example of product/market strategy for:

a. horizontal integrationb. vertical integrationc. retrenchment turn aroundd. concentric diversification

52. Strategic marketing has all of these interacting components, EXCEPT:

a. corporate missionb. product/market strategyc. marketing mix - PPPPd. competitive strategy.

53. Overall cost leadership may arise from:

a. All of the theseb. Product special design c. Raw-material sourcingd. Lower costs than rivals

54. COMMUNALITY in operations for: distribution, image and market impact, sales and advertising effort, plant usage, R&D effort, operating costs, raw material purchasing, up stream purchasing, is an example of a competitive strategic thrust that is:

a. competitive scopeb. overall cost leadershipc. synergisticd. seductive

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55. STRATEGIC SUPPLY SYSTEMS that secure access to raw materials, get priority for production equipment, dominate supply logistics. is an example of a competitive strategic thrust that is:

a. synergisticb. overall cost leadershipc. competitive scoped. pre-emptive

56. To compete with products/services in markets, use all of the following, EXCEPT:

a. Concentrating on existing markets/productsb. Innovation based on existing resourcesc. Buying indirect competitorsd. New market/product development

57. To achieve MARKET DEVELOPMENT by selling present products in new markets, the usual options include all, EXCEPT:

a. New product development for present markets. b. Attract other market segments, by developing new appealing product versions, and

using other distribution channels and promoting though other media.c. Open additional geographical markets, by regional, national and international

expansion.d. Massive advertising campaigns for the new markets

58. STRATEGIC Implementation is all of the following, EXCEPT:

a. A highly social activity, since we have to work though people.b. A highly emotional activityc. Changing people's behavior and value systems.d. A strictly objective professional work

59. Common causes for STRATEGIC IMPLEMENTATION PROBLEMS are all of the following, EXCEPT:

a. Training and instructions for lower management levels not adequate.b. Major unforseen problems arosec. Coordination of implementation not efficient enoughd. Took shorter time than anticipated

60. Product/market strategies from JOINT VENTURES usually result in:

a. low risk; slow growth; normal profit.b. high risk for R&D and pre-marketing cost; very high initial profits; difficult to achieve

long-term success.c. taking a chance or going underd. moderate risk; faster growth, improved profit.

dbcbb cdacd caddb

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QUIZ ANSWER SHEET

1 C 26 D 51 C 2 A 27 A 52 C 3 D 28 C 53 A 4 A 29 A 54 C 5 B 30 D 55 D

6 C 31 B 56 C 7 D 32 C 57 A 8 B 33 C 58 D 9 A 34 B 59 D10 A 35 C 60 D

11 D 36 D12 B 37 A13 A 38 B14 D 39 D15 A 40 D

16 B 41 B17 C 42 B18 B 43 A19 C 44 B20 D 45 C

21 B 46 D22 A 47 A23 B 48 C24 A 49 B25 D 50 B

Note: ... one of these answers may be wrong ... ... you can decide which one it is ... ... but only if you can convince your whole SG ...

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GUIDE TO THE CASES

UNIT I

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ASSIGNMENT 6.0 LECTURE - CIBA-GEIGY A1


a. CG is a large, highly centralized, global corporation presenting an interesting example of one company's innovative approach to making internal services, formerly highly controlled and bureaucratized, more market oriented.

b. Internal services were taken out of the highly controlled and bureaucratized system, and put into four categories: "still highly centralized, totally decentralized, partly independent, totally independent".

c. At one extreme, such services as Finance & Control, Legal, and R&D remained centrally organized, either because of their strategic importance to the company or simply because it made little economic sense for them to operate freely in an open market.

d. The only unit empowered to become fully independent was Communication Services, which acquired the name Allcomm. This unit was allowed to compete both for CG and third party business, and to generate its own profits. Most importantly, the company was now free to pick and choose its customers, and use market prices to charge for its services.

e. The object? Twofold: use Allcomm as a role model, and turn an overhead into a profit generating unit.

f. The 150 employees at Allcomm, who had been used to dealing almost exclusively with their captive-market colleagues at Ciba-Geigy, now had to change their thinking and behavior.

g. Jurg Chresta, the newly-appointed CEO, was to manage this internal change process. He also had to make some major decisions concerning which clients to select, as well as the extent and nature of Allcomm's relationship with Ciba-Geigy.

g. The challenge in the case is to develop a new strategy for Allcomm using the VPMA concept.

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6.2 WHY DID CG TOP MANAGEMENT WANT TO CHANGE?

a. CG's top management saw that the only way to make the company more efficient and competitive under increasingly tight global market conditions was to change its structure radically.

b. The objective was to engender a competitive, market-driven atmosphere throughout the company.

6.3 WHAT WAS THE TRADITIONAL CG APPROACH TO MANAGING SERVICES?

a. Prior to the reorganization, the Central Functions dictated and performed many of the internal service activities.

b. The operating divisions and regions had no choice: when it came to these 11 services, they were obliged to take whatever services and people the Central Functions sent to them. As some employees commented in retrospect, the system resembled that of a centralized economy in many ways: the service provider dictated to the user which services had to be purchased, the number and the price. The barrage of paper and form filling which existed between the providers and users created service vacuums which stymied ideas and creativity, and lowered morale.

c. The direct expenses of the services which the Central Functions provided, as well as a percentage of the overhead, were allocated to the divisions regardless of whether or not a service had been requested or used. Moreover, divisions and business units could not control costs since they did not know where the costs were coming from, nor did they know the value of the services they were receiving.

d. The essence of the structure was on control and on covering the costs which were incurred. Sometimes, these costs were allocated regardless of whether the services had been requested or used.

e. The overall effect was that providers were "divorced" from users: they were unaware of the users' real needs, and users were not only unable to communicate directly with providers, they did not even know what they could ask for.

f. The net result was that Ciba-Geigy risked losing its competitive edge in the marketplace.

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6.4 WHICH INTERNAL SERVICES COULD BE EXTERNALLY COMPETITIVE?

a. CG's top management used a model consisting of four categories of services: centralized, decentralized, partly independent, fully independent.

b. Irrespective of the structure and the categories into which different services may fall, all internal services should be geared so that they are responsive to user needs and thus more effective in terms of the end market results.

c. Potentially competitive services were: four factories, engineering and process technology, research, information systems, personnel, administration of pension funds/real estate, purchasing and communications.

6.5 SUGGEST THREE ALTERNATIVE VISIONS FOR ALLCOMM

a. The important question for Allcomm is what market to choose for the 50% of its potential business. It has a reputation in Switzerland and in pharmaceutical, but the market is restricted.

b. Alternative visions include:

1. An advertising agency locking in all CG business and concentrating on remaining an retain their sole support.

2. A safe workplace living in the CG employment atmosphere with a predictable reliable future until top management changes.

3. An alliance with another non-competing agency which will supply the non-CG business.

c. Should it expand internationally? This will give Allcomm growth potential and obviate the problem of eventually competing head on with Ciba-Geigy. And, since many customers have global operations, international presence is demanded in any case.

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6.6 FOR JURG CHRESTA, DESIGN AND JUSTIFY A BRIEF VISION STATEMENT FOR ALLCOMM FOR THE NEXT FIVE YEARS

a. Allcomm can be a leading profitable communications center serving a wide variety of clients apart from CG.

b. Allcomm can provide customers with a state-of-the-art solutions and services to all their international communication challenges.

c. Allcomm can be a company with an exciting and stimulating workplace.

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6.7 LEARNING POINTS










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(a)Re-assemble in CSG

(b)Study carefully the lecture on the case

(c)Record key learning points in your notebook

(d)Discuss outstanding questions

(e)When the bell rings it is time for lunch

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GUIDE TO THE CASES

UNIT II

134

ASSIGNMENT 10.0 - LECTURE ON CIBA-GEIGY A2

10.1 VISION STATEMENT AND WHAT THE FUTURE HOLDS - EVALUATION

a. To meet CG's new expectations, Allcomm must demonstrate its expertise, creativity, motivation and flexibility.

b. Allcom can only establish the necessary credibility with CG if it is perceived as successful competitor outside the CG environment.

c. Allcomm's critical advantage will always be the performance of its staff. Therefor Jurg Chresta must retain and develop his colleagues to their full potential.

10.2 DISCUSS ALTERNATIVE PRODUCT/SERVICE MARKET ARENAS FOR ALLCOMM

a. Overall, the objective is clear: internal services have to become more customer oriented. In other words, CG must move to a freer market-driven structure.

b. Allcomm and other services which have become partly or totally independent would have to make radical changes to their strategies and cultures for this to happen.

c. Specifically, Allcomm and Jurg Chresta have several challenges: how to put Allcomm in the open market, and to resolve whether or not to continue to rely on CG as the major customer.

d. The important question for Allcomm is what market to choose for the 50% of its potential business. It has a reputation in Switzerland and in pharmaceutical, but the market is restricted. Should it expand internationally? This will give Allcomm growth potential and obviate the problem of eventually competing head on with Ciba-Geigy. And, since many customers have global operations, international presence is demanded in any case.

e. Options include: pharmaceutical or other industries, and domestic or international business.

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f. When the case begins in 1989, 2-3% of Allcomm's costs are already being covered by outside customers. We don't know who they are, but we can assume that they are in non-competing pharmaceutical, and are in and around Switzerland. Ideally, Allcomm wants Ciba-Geigy to account for 50% of total revenues.

g. CEO has made other resolutions: to move the company from an advertising unit to a communications center; to provide customers with solutions and results; to expand beyond pharmaceutical. Accomplishing this will require developing new capabilities, together with some very important decisions, such as: what services to offer; how to organize, evaluate, cost and price.

10.3 IDENTIFY ALLCOMM'S COMPETITIVE ADVANTAGES/DISADVANTAGES

a. Allcomm does have the expertise in the pharmaceutical industry. Relationships have been built up for several years between Ciba-Geigy clients and Allcomm employees. But what about other industries? And providing total solutions? Clearly, if Allcomm opts to expand either into new sectors and into solutions rather than traditional advertising services, it will need more/different people.

b. CG has guaranteed that it will use Allcomm's services for three years; by continuing to prioritize this relationship, Allcomm can be assured of a gross income in its first year of independent operation equal to 100% of its previous year's earnings, 90% the following year and 80% the third year.

But, the downsides are:

Restricting its client base to CG alone could be risky since these colleagues, now having to pay full market prices, have become more demanding and have begun exploring the possibility of using outside advertising agencies.

c. Keeping close to CG could also inhibit the change process to a more competitive culture. Not all staff are reacting to the change with equal enthusiasm; while some want to move as quickly as possible, others are still resisting.

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d. The 150 employees at Allcomm, who had been used to dealing almost exclusively with their captive-market colleagues at CG, now had to change their thinking and behavior.

e. At the moment, there is little unanimity amongst Chresta's staff, which is to be expected since many had initially joined in order to be part of a large conservative corporation. The figures in the case substantiate the divergence of opinion amongst Allcomm's employees. 40% of the staff share Chresta's views and will help him drive the change. If handled correctly, the remaining 40% are probably going to be followers.

f. The CEO, has to manage this internal change process. He also had to make some major decisions concerning which clients to select, as well as the extent and nature of Allcomm's relationship with Ciba-Geigy.

10.4WHAT IS THE BEST PACE OF CHANGE?

a. Some will say that, by moving more quickly, Chresta will please and encourage the innovative and ambitious employees. On the other hand, the right skills, structure and system have to be in place first if high quality, creative services are to be delivered. Lacking that, the risk is failure.

b. Others will say that, if he goes too slowly, he may dilute the enthusiasm associated with the change, miss opportunities and literally lose his most creative people.

10.5FOR JURG CHRESTA, DESIGN AND JUSTIFY A BRIEF ALLCOMM CORPORATE MISSION STATEMENT FOR THE NEXT FIVE YEARS





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10.7LEARNING PATTERNS

insert


a. Re-assemble in CSG

b. Study carefully the lecture on the case

c. Record key learning points in your notebook

d. Discuss outstanding questions

e. Reassemble in MG when the bell rings

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GUIDE TO THE CASES

UNIT III

140

ASSIGNMENT 5.0 LECTURE - CIBA-GEIGY B1


a. The (B) Case opens in September 1992, and tracks the firm's progress after almost one and half years as an independent unit.

b. By the end of fiscal year 1991, Allcomm has a total operating turnover of SF 20.2 million and has made a profit of SF 38,706. This figure exceeds the original expectations that Allcomm would only break even by the end of fiscal year 1992.

c. Of its 3,800 customers, 10% were external non-Ciba-Geigy clients. Because these 380 customers contributed about 15% to the operating turnover, Allcomm did not have to use the entire SF 3 million turnover guarantee accorded to it by Ciba-Geigy.

d. Achieving these results meant taking some risks and rethinking Allcomm strategy: where it would do business, what it does well, how it is organized, and how it would define success and make money.

5.2 EVALUATE THE CORPORATE MISSION STATEMENT

a. The CEO was faced with a time constraint in developing the corporate strategy. He has to ensure that Allcomm is profitable before the CG support runs out in three years.

b. The corporate mission statement is developed to increase the short term chances of success, yet a the same time, he must build up a meaningful future for Allcomm.

5.3 HOW SHOULD ALLCOMM POSITION ITSELF

a. As a complete communication agency where customers receive the most modern and effective services.

b. For CG customers Allcomm should be perceived as part of the group; but yet better and more effective than the outside competition.

c. For outside customers Allcomm should be seen as one of the leading communication agencies, comparable to the very best, and definite one for companies that seek the best.

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5.4 WHAT ARE SOME OF THE PARADOXES THAT FACE ALLCOMM?

a. There are certain paradoxes which Chresta must deal with:

how to give people more time for customers but, at the same time, ensure that they are cost effective;

how to be flexible in pricing, but ensure that everyone knows exactly what is expected of them;

how to give groups freedom but, at the same time, make time budgets rigorous so as to control costs;

how to create a feeling of security and, at the same time, engender the firm with a strong sense of urgency;

how to make people into specialists but, at the same time, produce a generalist approach to customers--ready to solve their problems;

how to make people into team players, but develop leadership qualities in them as well and retain individuality;

how to collaborate and compete (differentiate) at the same time;

b. Allcomm must learn how to keep Ciba-Geigy happy by knowing its business even better and, at the same time, find new clients in other industries;

c. Allcomm must learn how to manage people of different cultures simultaneously--those in the 20%, the more innovative risk takers, and the more traditional types.

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5.5 DESIGN AND JUSTIFY A "COMPETITIVE STRATEGY STATEMENT FOR ALLCOMM


b. This will enable delivery of services to CG in a way that is unique. Naturally for the CG market, Allcomm will focus on the each company in such a way that Allcomm is regarded as particularly qualified to handle CG company problems.



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5.6 LEARNING POINTS

a. We cannot move from vision to action without giving sufficient thought to mission and positioning.

b. Competitive strategies are directly related to mission and positioning.

c. Final determinate of the competitive strategies is the of "Competitive Advantages", and the selection of specific advantages to be exploited.

d. Most competitive strategies are not one single factor e.g. price, but a combination several factors.

e. Captive markets may prove a disadvantage in the long term when customer focus is called for.

f. Globalizing service operations is probably no longer an option: it is a necessity, requiring alliances with the correct partners and strong coordination.

g. To be profitable in services, it's important to manage capacity and attain "economies of know-how".

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(a) Reassemble in CSG




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GUIDE TO THE CASES

UNIT IV

146

ASSIGNMENT 10.0 - LECTURE - CIBA-GEIGY B2 (30 MINUTES)


See your flip chart for new perceptions/ideas. (hopefully).

10.2 EVALUATE THE COMPETITIVE STRATEGY STATEMENT

a. Allcomm re-assured CG that they would not be losing out by continuing to use Allcomm's differentiated services, from what they were before.

b. Allcomm delivers to CG what the CG companies felt was important, but in am unique a way as possible.

c. Allcomm also focussed on CG market by keeping Allcomm's special CG expertise and know how positioned. in the tight way.

d. Allcomm also extended its competitive scope by offering CG as wider range of services as possible.

e. For the outside clients, Allcomm used synergy by exploiting commonality of skills and resources needed for (with CG) and by the competitive scope and differentiation of the services.

10.3 IDENTIFY THE PRODUCT/MARKET STRATEGY ADOPTED BY ALLCOMM

a. Four distinct strategies:

1. Focus on selling more existing services to CG2. Focus on developing and selling new services for CG3. Focus on selling existing services to new clients4. Focus on developing and selling new services to new clients.

b. These strategies are ranked in order of unpredictability and potential payoff e.g. 1. is fairly but with a poor payoff.

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10.5 WHAT ARE THE CRITICAL SUCCESS FACTORS THAT HAVE CONTRIBUTED TO THE ALLCOMM CHANGE PROCESS?

a. So far, the company has accomplished several things, both internally with Ciba-Geigy and externally in the market.

1. Internally, Allcomm has successfully demonstrated its expertise, creativity, motivation and flexibility to carry out Ciba-Geigy's new logo campaign worldwide. Convincing the chemical company of this, however, proved much harder than expected.

2. Externally in the market, 15% of its customers are non-Ciba Geigy clients. Allcomm has also signed up accounts in areas far removed from chemicals: a beer company, a humanitarian organization, a fashion company and, potentially, a leading European automobile manufacturer.

b. To a large extent, the success so far has been due to Chresta's willingness to do things differently and take risks:

1. He formed the experimental team, a group of innovative people, in order to use them as a role model. A self-managed unit, they have successfully concentrated on getting new business outside Allcomm's traditional industries.

2. He used the "diffusion concept" to get a new culture into Allcomm since he never believed that everyone would change at the same pace. Now, he intends to use the formula in the whole advertising department, which means that the new culture will extend to 20% of Allcomm's workforce.

c. But, learning from his mistakes, Chresta will provide them with administrative backup.

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d. He has spent a lot of time on teaming and on eliminating the structural and hierarchic al barriers which got in the way of effective teamwork and learning, and impeded close customer relationships. Chresta did this in several ways:

1. Teams, rather than individuals, have been grouped and identified;2. The team is now regarded as the hero and is rewarded accordingly;3. He has got rid of job titles, which meant more internally than they did

to customers,4. He has eliminated the rules and regulations so that people could get

on with the job of finding, satisfying and retaining customers;5. He now allows people to own shares in the company--almost 70% of

Allcomm's employees have these shares;6. He allows teams to self-manage by empowering them to get on with

what needs to be done, to form their own culture, values and, even, behavior.

7. He understood and has practiced the dynamics of changing people over time.

e. All these moves were intended to encourage more experimentation, risk taking, and entrepreneurship amongst employees in a culture previously riddled with control and rules.

f. Whereas the earlier organizational structure inevitably led to an upwardly and inwardly focussed culture.

This de─layered flatter organization, which encouraged horizontal rather than vertical relationships, was intended to get people to work together and focus on the customer.

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10.6 WHAT ARE THE CHALLENGES THAT ALLCOMM NOW FACES?

a. Although Allcomm has experienced unexpectedly good performance, it still must make some critical decisions in key areas. Firstly, it must decide how it wants to react to the Customer Satisfaction Survey and the Employee Satisfaction Survey.

b. Customer Satisfaction Survey - While almost 80% of the customers surveyed are satisfied with Allcomm's performance, the negative evaluations share a common source: too much of the Ciba-Geigy culture still pervades at Allcomm, hampering real customer satisfaction.

c. Employee Satisfaction Survey - Some of the responses in the Employee Satisfaction Survey appear to support the viewpoint that too much of the "old" culture still exists at Allcomm. As Exhibit 3 illustrates, relative employee dissatisfaction exists in two areas:

1. Cooperation amongst business units (only 66.7% agree that it exists);

2. Channels of communication between management and employees (only 62.8% feel that such channels are working).

In both instances, the percentage of employees who fully agree that cooperation is good and that effective channels of communication exist is much less still.

d. Allcomm must also resolve several other issues:

1. What customers to aim for in the future2. Which services to offer so as to provide a solution to customers;3. Who should do what (make or buy); and,4. How to assess profitability.

e. Clearly, long-term relationships and solutions will mean closer working ties to fewer customers. But, Chresta has to decide what markets (industries) and countries to concentrate on. As for going global, there is no option, as his customers are demanding it. But, how to go about it? Retaining control of quality and customer contact will be a critical challenge.

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f. How many services to offer will ultimately depend on the solution package needed by Allcomm's respective markets.

Then, the issue is: does the company perform all the services itself, or buy some from outside?

g. Regardless of the decision, the issue is one of capacity management--either Allcomm provides its people with new and multiple skills, or it forms alliances with third parties (including competitors), which can provide capacity either more cheaply or at peak times.

h. One unresolved problem is how to make the services profitable. As yet, Allcomm's management does not know the true costs of its services, and pricing is still made on the basis of "labor hours" spent.

Somehow, it will have to get a better handle on costs and begin to price on value.

Equally important, Allcomm will, as the case suggests, have to have a flexible system which enables it to respond to the individual needs of users.

Video: the 10─minute video interview with Jurg Chresta provides an interesting insight into the CEO's use of the experimental group, why he intends to use them as a role model, and some general learning on how the process was managed.

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a. Competitive strategies have to be based on competitive advantage.

b. It is usually necessary to have several competitive strategies at the same time.

c. One competitive strategy does not work as well as several in a product market. Thus for more that one product/market, several competitive strategies are needed.

d. The time needed to implement different competitive strategies, as well as their pay-off time, will vary extensively.

e. The change process takes time as it must work through the various categories of employees.

f. Providing solutions means getting people to work effectively in teams. The team becomes the core value-creating unit: it has to be chosen, evaluated and rewarded accordingly.

g. Solution providers need time with customers. This has to be taken into account in pricing strategies. Flexible pricing--i.e., bundling and unbundling--gives firms the options they need to provide different customers with individualized solutions.

h. Captive markets may prove a disadvantage in the long term when customer focus is called for.

i. Globalizing service operations is probably no longer an option: it is a necessity, requiring alliances with the correct partners and strong coordination.

j. To be profitable in services, it's important to manage capacity and attain "economies of know-how".

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GLOSSARY

Acceptability test Examines the attitudes that major stakeholder will have toward the proposed strategic business plan.

Brainstorming Technique that encourages individual team members to free themselves from any inhibitions and constraints and to generate as many creative ideas as possible. It is quite useful for generating ideas.

Company profile Summarizes an analyst's perspective on how a company is performing and why. The following three types of comparisons are usually used to develop a company profile: historical comparisons. competitive comparisons. and normative comparisons.

Competitive Advanatage A competitive advantage must be substantial enough to make a difference, sustainable against environmental change and competitor action, and be capable of being developed into visible business attributes that influence customers.

Competitive Strategy How the company intends to achieve a sustainable competitive advantage. One of the three constituents of corporate strategy. There are three major competitive strategies: overall cost leadership, differentiation, and focus. Competitive strategy involves how the company intends to achieve a sustainable competitive advantage in its chosen product markets, with a variety of strategic thrusts.

Competitive arenas The business and geographic arenas, where the company will compete in the future. Part of competitive strategy.

Concentric diversification Buying companies similar with products/markets or different product/markets,in order to achieve some other form of synergy and competitive advantage. Comment: Provides new technology, markets, products and resources; potentially high growth, profitability and risk.

Conglomerate diversification Buying businesses for investment attractiveness and other financial criteria; product/market synergies not planned. Comment: Can provide high growth, profitability and high risk.

Corporate mission Tool for developing corporate strategy. Statement of what role

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the company will seek to play in order to achieve its vision: what needs does it wish to satisfy in which markets with what products/services against which competitors and how will it measure its success.

Corporate culture Includes the assumptions. values. traditions, and behaviors that prescribe the actions of individuals within a firm.

Corporate strategy - I Overall business strategy with three components: corporate mission, product market strategy and competitive strategy, which interact all the time. It is easier to build up a coherent, unified business strategy from a synthesis of these three components, which provide the basis for measuring its internal consistency.

The pattern of company purposes and goals, and the major policies and actions for achieving them, that defines the business or businesses the company will be involved with and the bind of company it will be.

Corporate strategy - II To develop corporate strategy: a VIEW leads to a VISION of what the future holds, identifying COMPETITIVE arenas, and SOURCES of competitive advantage. This leads to development of a corporate MISSION, from which POSITIONING can enable a COMPETITIVE strategy and a PRODUCT/MARKET strategy.

Thus the strategy must be consistent with the company's vision", with its resources AND with it's special distinctive competencies or sources of competitive advantage.

Cost Cost of product. Vague term! See manufacture cost, total cost, variable cost, fixed cost, opportunity cost, differential cost, true cost.

Customer Analysis Involves three sets of strategic questions: segmentation, customer motivation and unmet customer needs. The principle task is NOT to make the customer do what suits us. The task is to conceive what suits the interests of the customer ... and then make the business do just that.

Customer Motivation What motivates customers to buy and use the product or services? What product attributes are important? What objectives do the customers seek? What changes in customer motivation are occurring or are likely to occur?

Devil's advocate approach Develops a solid argument for a reasonable recommendation. Then

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subjects that recommendation to an in-depth, formal critique completed by a formally appointed devil's advocate. Through repeated criticism and revision, the approach leads to mutual acceptance of recommendations.

Differentiation - strategic thrust - I Generic strategic thrust that emphasizes providing customized and specialized products and services for all segments in an entire market.

Emphasizes differences between a product and competing products.

Differentiation - strategic thrust - II A competitive strategy involving: product quality, performance, durability, conformance, features, name, reliability, serviceability, fit and finish, service quality, responsiveness, competence, credibility, empathy, courtesy, communication etc.

Product quality, i.e., performance, durability, conformance, features, name, reliability, serviceability, fit and finish Service quality, i.e., tangibles, reliability, responsiveness, competence, credibility, empathy, courtesy, communication

Diversification Marketing a varied line of products. Reduces risk. Large product-line may be more economic to duplicate.

Acquiring related or unrelated businesses, and in some cases major new product line development programs.

Environmental scanning Process of examining and forecasting competitor actions, industrial forces and industry and company-specific threats and opportunities.

Environmental turbulence The amount of change and complexity in the environment of a company. The greater the amount of change in environmental factors, such as technology and governmental regulations, and/or the greater the number of environmental factors that must be considered. the higher the level of environmental turbulence.

Focus Generic strategic thrust that emphasizes segmenting an entire market and focusing on only one or few segments. Companies following a focus thrust emphasis providing either a differentiated product or service to the segment or providing a low cost product or service for the chosen segment.

A competitive strategy involving: special product line, target

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to a special market segment or limitation to a specific geographical area. etc.

General managers Managers who are responsible for the performance of an entire organization or a significant part of an organization which is often called a strategic business unit (SUB).

Horizontal integration Buying competitors with product/services in the same stage of the production/marketing chain. Comment: growth in areas of proven competence; elimination of competitors; higher market share; improved economics of scale; improved profit and ROI.

Market Segmentation Division of the market into smaller homogeneous segments by user type.

Market Share Sales potential. Company's sales as a percentage of the total industry sales on either an actual or potential basis. Often used to designate the part of total-industry sales a company hopes, or expects, to get.

Marketing Mix Marketing is concerned with the selection of a proper marketing mix:

Positioning - how should our target market perceive us? Product - what kind of goods and services? Price - how much and on what terms? People - who should we target and how to segment the market? Place - where and how to distribute our goods and services? Promotion - how to get the buyers?

In 1995 the new marketing mix has 6 (not 4) "P's".

Marketing Management Concept The concept is to be consumer-oriented; consumer needs (or perceived needs) are the determinants of the company survival, growth and profitability. Seek to achieve a profitable level of sales; to be profit oriented. Coordinate the direction of all marketing activities by formulating consistent inter-related strategies directed to one common goal of: "profitably satisfying the needs of the target consumer". Customers do not buy a product; they buy what the product can do for them; they buy services!

Marketing Planning Setting objectives for marketing activity, and determining

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and scheduling the steps necessary to achieve such objectives.

Marketing Strategy Strategy concerned with maintaining or achieving market-acceptance for established products and designing means for securing markets for products. Designed to fulfil the customer's needs.

Marketing Means directing all company activities towards one common goal. The goal is to discover and satisfy the present and potential needs of a target customer, using company skills and resources. Use company resources to satisfy a target market profitably. Create and retain profitable customers. Finding out what the target markets' needs (either conscious or subconscious) are, and satisfying them to the best of the company's ability.

Marketing mix Combination of product, price. promotion. and place decisions made by managers to position products and services.

Mission statement Broad statement of a firm's direction and purpose. Tool for developing corporate strategy. Statement of what role the company will seek to play in order to achieve its vision: what needs does it wish to satisfy in which markets with what products/services against which competitors and how will it measure its success.

Monopolistic competition Occurs in an industry with a few large and medium-sized competitors and many small competitors. The larger competitors are severely constrained in their ability to set prices.

Monopoly Means that a single company dominates and controls prices in an industry. A multinational expansion thrust may involve joint ventures with partners in other countries, wholly owned subsidiaries, or expanded distribution channels.

Nominal group technique Structured approach to problem solving and decision making that clearly divides idea generation and idea evaluation into two stages. It is useful for eliciting ideas and information from team members.The technique uses a 10-15 minute period of silent brainstorming and then ideas are recorded using a round-robin method. Ideas are then discussed and rated.In some groups as many as 10-12 people participate.

Oligopoly

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Involves four or five large competitors that control most of the output of an industry; such firms can implicitly collude to set prices.

Operational risk Refers to the possibility that new strategies and plans will fail.

Opinion polling Involves surveying knowledgeable individuals (such as executives, industry analysts, sales representatives, or purchasing agents) to develop a consensus regarding future events.

Opportunity, industry-wide Benefit or potential benefit that all or most companies in an industry may realize.

Opportunity, company-specific A benefit or potential benefit that may result from the interaction between present or future positive environmental variables and industry wide opportunities, and company strengths.

Organization hierarchy Refers to how people and tasks are grouped. For example, an organization may be structured in functional units such as accounting and marketing. with only one type of specialist working in each of these units.Or, an organization can bc structured in product units. In this instance, specialists of all types are grouped together within one unit.

Organizational dependence Refers to the ability of managers influence the actions of customers and suppliers. The lower the influence of managers on customer and supplier actions, the greater the organizational dependence on customers and suppliers.For example, a company with a single major customer is often very dependent on that customer for future sales.

Organizational design Refers to both a process of fitting the organizational hierarchy, authority relationships, information and communication systems, and reward systems to a corporate strategy and strategic plan and the current state of the organizational hierarchy, authority relationships, etc.

Overall leadership A generic strategic thrust that emphasizes providing products and services at the lowest per unit cost within an entire market.

Overall cost leadership - strategic thrust

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Low cost. A competitive strategy involving: experience curve payoffs, no-frills products, product special design, raw-material sourcing, low-cost distribution, lowering labor costs, government subsidies, location changes, production innovations, buying competitors, automation, reducing overheads etc.

Perfect competition Refers to an industry with many small firms none of which can influence or set prices

Planning The process of designing a consistent integrated program of actions that when carried out will accomplish specific goals.

Planning horizon The time frame for planning strategic activities and for accomplishing strategic goals. This time frame is often 5 years, but the appropriate horizon depends on the industry. For example, 2 years in the fashion industry and 10 or 15 years in the forest products industry.

Policies Formal statements of a company's practices, procedures, or intentions. Policies guide managerial decision making and actions to ensure compliance with the corporate strategy.

Positioning Part of the marketing mix. The picture that the target market has of the company. What is the minds of the customers.

The position that a company owns in the marketplace is the net result of the interaction of all the experiences, beliefs, feelings, knowledge and impressions that the market has accumulated about the company. Positioning is a strategic issue - it is the first element of any marketing strategy aimed at a target market.

Positioning is a strategic statement about how the company/brand wants to be "seen" on the marketplace.It is based on a "vision" of what the company wants to be and how it wants to be perceived by its stakeholders. It thus guides the development and execution of the total marketing strategy.

Productivity - strategic Strategic productivity improvement each year can be measured with two indices (which should exceed 1.0): 1. Increase in % of sales/increase in % of payroll cost 2. Increase in % of sales/increase in % of assets employed

Product management Planning, direction, and control of all phases of the

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life-cycle of products, screening of such ideas, coordination of research and physical development of products, packaging and branding, introduction on the market, market development, modification, discovery of new uses, repair and servicing, their deletion.

Product-line Group of closely related products satisfying class of need, used together, sold to the same customer groups, marketed through the same outlets, or falling within given price ranges.

Product/market strategies - concepts Tool for developing corporate strategy. Strategies to optimize product sales in selected markets. Alternatives include: concentrate on existing markets, new market development, new product development, innovation based on existing resources, buying direct competitors, joint ventures, vertical integration, buying synergistic businesses etc. Product/market strategy may be by: internal growth or acquisition growth.

Product/market strategies - internal growth - I Internal growth strategies use current competencies to achieve low risk steady growth, by:

1. Concentration - on current business with single market/technology activity.

Comment: Lowest risk; slow growth; narrow range of investment options; normal profit.

2. Market development - provide products with only cosmetic modifications, to customers in related market areas, with new distribution channels or a changed marketing mix.

Comment: Low risk; slow growth; normal profit.

Product/market strategies - internal growth - II 3. Product development - modify existing products or create new related products; market to current customers through established distribution channels.

Comment: Moderate risk; slow growth; improved profit.

4. Innovation - respond by evolution or revolution, to customer/market expectations with highly improved or new products/services; aim to achieve high customer acceptance; on impending product maturity, move to new product/services and thus make the older products obsolete.

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Comment: High risk for R&D and pre-marketing cost; often very high initial profits; difficult to achieve long-term success.

Product/market strategies - internal growth - III 5. Joint ventures - cooperate with another company to obtain competitive advantage in a particular environment or to acquire a special skills or resources currently lacking. Comment: Moderate risk; faster growth; improved profitability; successful long-term cooperation may well result in a merger.

Product/market strategies - external growth - I Acquisition growth strategies achieve control of other existing businesses by:

1. Horizontal integration - buying competitors with product/services in the same stage of the production/marketing chain.

Comment: growth in areas of proven competence; elimination of competitors; higher market share; improved economics of scale; improved profit and ROI.

Product/market strategies - external growth - II 2. Vertical integration - buying suppliers or customers

Comment: increased dependability of supply and production volumes; broad management risk; higher financial risk from restriction to one industry.

3. Concentric diversification - buying companies similar with products/markets or different product/markets,in order to achieve some other form of synergy and competitive advantage.

Comment: Provides new technology, markets, products and resources; potentially high growth, profitability and risk.

Product/market strategies - external growth - III 4. Conglomerate diversification - buying businesses for investment attractiveness and other financial criteria; product/market synergies not planned.

Comment: Can provide high growth, profitability and high risk.

Product strategy Strategy concerned with the creation of products to meet changing needs of customers, or to attract new customers.

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Product life cycles The product life cycle as a strategic market driven tool with five phases: introduction, growth, maturity, saturation and decline. Each phase has special characteristics.

Product policy Part of marketing mix. Decision on product type, quality, life-cycle, planned obsolescence, new-product development etc.

Retrenchment/turn-around Concentrated effort is crisis period of company decline (evidenced by cash shortage), to gain time and retain and strengthen basic market competencies. Comment: Top management changes; cost reduction; asset reduction; product/market synergies less significant that immediate survival of the organization.

Search, breadth One of the strategic management information search strategies. The goal is to examine many sources and topics, then search for detailed information as needed.

Search, depth first One of the strategic management information search strategies. The goal is to research in detail only a few major topics first and then broaden the search to other areas as that becomes necessary.

Segmentation - objectives Who are the buyers and users of the product or service? Who are the largest buyers? What potential customers can be identified who are not buying from us? How does the market segment? How should the market be segmented? The object of market segmentation is to select the target market whose needs you intend to satisfy.

Steps in market segmentation: identify basis for segmenting the market for that product or service; develop profile of the various segment clusters; match segments to your needs, objectives, visions, resources.

People (segmentation) is the process of dividing a market up on the basis of similar consumer characteristics so that investment can be made where it will be most effective in establishing a competitive advantage

Segmentation - justification Fundamental for effective marketing:

1. Consumers can be grouped into different market segments depending on their needs and wants.

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2. The consumers in any market segment will favor the offer that comes closest to satisfying their particular needs and wants.

3. The organization's task is to research and choose target markets and develop effective offers to satisfy them, as well as the necessary skills and resources.

Segmentation - necessary For groups of customers are looking for different things in a product or service. There are sufficient numbers of these customers. These customers can be identified and reached. We can offer what they want. The customer group is likely to be profitable. There is significant competition. The market needs to be grown.

Need to have a profound understanding of customers needs with MARKET ANALYSIS; divide up the market accordingly MARKET SEGMENTATION; select groups of customers segment(s) TARGET SELECTION; redesign the marketing program MARKETING MIX

Segmentation - industrial markets By geography, size, industry, application etc. Allows a company to exploit its resources better by selecting compatible customers. Allows more sharply focused strategies. Segmentation is more apt to develop customer loyalty since the firms offering is more geared to that market.

Segmentation - consumer markets Four segmentation variables: 1. Geographic - Region, country, city, area 2. Demographic - Age, sex, family size, family life cycle, income, occupation, education, religion, nationality 3. Psychographic - Social class, personality, interests, attitudes, values, lifestyles, opinions, orientations 4. Behavioristic - Purchase occasion, benefit sought, use status, use rate, loyalty status, attitude to product/services

Services Activities, benefits, or satisfactions offered for sale, or provided with the sale of goods. Customers for a product are really buying the "services" that the product provides.

Stakeholder All groups that have a vested interest in a firm's performance and actions. These groups may be external to the firm, e.g., members of the local community, stockholders, customers, suppliers, and creditors: or internal to the firm, cd., top managers, line managers, staff, and hourly employees.

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Standard Industrial Classification (SIC) A U.S. government classification system tt divides economic activities into broad divisions (manufacturing, mining, retail trade, etc.). Each division is further broken down into major industry groups (two-digit SIC code), then into industry sub-groups (three-digit Co code) and, finally, into industries (four digit SIC codes).

For example, the SIC code for home refrigerators is 3632 while the SIC code for home laundry (washing) machine is 3633 Thus, a firm that manufactures both refrigerators and home laundry machines would compete in two industries identified by SIC co 3632 and 3633.

Strategic Marketing Strategic marketing is part of corporate strategy, which has three interacting components: the corporate mission, the product/market strategy, and the competitive strategy. The corporate mission depends upon a "Vision" for the company which concentrates energies on a common goal, and yet lets opportunities emerge.

Visions that awake extraordinary performance have three things in common: a noble purpose, a sense of urgency, and clear boundaries. Product/market strategy defines markets, products and services, and the means to develop them.

Competitive strategy deals with how the company intends to achieve a sustainable competitive advantage in its chosen product/markets.

Strategy See corporate strategy

Strategic industry analysis Involves an overview of strategic forces affecting a target industry, an analysis of strategies of companies in the industry, and forecasts and recommendations.

Strategic business units Planning units within a large, diversified company.A strategic business unit (SBU) must serve an external, rather than internal, market; must have control over its own destiny; should have a clear set of external competitors; and should be a true profit center.

Strategic business analysis Critically evaluates a company's current position, internal strengths and weaknesses, and external throw and opportunities.

Strategic business plan An action-oriented document that describes the mission,

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strategic thrust, and major actions for an entire organization or an SBU. The plan also usually includes resource allocations, major implementation steps and pro forma financial statements.

Strategic thrust A road statement of strategic actions that are intended to occur during the Planning horizon.

Strategic fit Indicates how well the firm's mission and strategies fit its internal capabilities and its external environment.

Strategic management An ongoing planning and analysis of a firm co-aligned with its environments while capitalizing process that attempts to external opportunities and minimizing or avoiding internal weaknesses ,and external strengths. Strategic management is also a future-oriented proactive management system.

Strategic management team A group of individuals working cooperatively to deal with strategic management tasks and problems.A group of top managers is often considered a team; also boards of directors or task forces may be called strategic management teams.

Strategic control Involves monitoring current plans and the strategic planning process to improve both future company performance and the strategic planning process.

Strategic group mapping Categorizes industry competitors into meaningful based on at least two strategic variables.

Strategy evaluation and choice A process that reconciles strategic actions, market opportunities corporate strengths and resources, values of general managers, and legal requirements and social responsibilities to select a "best" mission, strategic thrust, and set of strategic actions.

Strategy implementation The action step in the strategic management process. Strategy implementation involves providing leadership, communicating with managers, making adjustments in the strategic business plan, and many tactical plans and day-day decisions.

Strengths Internal characteristics of an organization that make it uniquely adapted to carrying out its tasks, or characteristics of the organization that competitors do not have, which create a competitive advantage.

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SWOT Analysis Analysis of strengths, weaknesses, opportunities and threats, for developing and implementing competitive and product/market strategies.

Threat, company-specific A problem or potential problem that may result from the interaction between company weaknesses and present and future negative environmental variables and industry-wide threats.

Threat, industry-wide A problem or potential problem for all or most companies in an industry.

Vertical integration Buying suppliers or customers. Comment: increased dependability of supply and production volumes; broad management risk; higher financial risk from restriction to one industry.

View Tool for developing corporate strategy. View of what the future holds; what are the anticipated regulatory, competitive, economic and geo-political environments in which the company must compete.

Vision Tool for developing corporate strategy. An energizing picture, based on a view of the future, of what top management wants the company to become. Visions that awake extraordinary performance have three things in common: a noble purpose, a sense of urgency, and clear boundaries.

The corporate mission depends upon a "Vision" for the company which concentrates energies on a common goal, and yet lets opportunities emerge.

Weaknesses Internal characteristics of an organization that inhibit its ability to carry out tasks, or characteristics that the organization does not have that competitors do, which create a competitive disadvantage.

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APPENDIX D - SOME IDEAS TO THINK ABOUT

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