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Becoming Market-Oriented
Determining Distinctive Capabilities
Matching Customer value Requirements to Capabilities
Achieving Superior Performance
Spanning Process
Creating & Providing Value for customers: Customer value can be defined as the difference between what
the customer gets from owning & using a product & the costs of obtaining the product. The organization’s
distinctive capabilities are used to deliver value by differentiating the product offer, offering lower prices
relative to competing brands, or a combination of lower cost & differentiation.
Achieving Superior Performance: The supporting logic for becoming market oriented, leveraging
distinctive capabilities, & finding good match between customer’s value requirements is that they are
expected to lead to superior customer value & organizational performance. Market-driven organizations
display higher performance than their counterparts that are not market-driven.
Corporate Strategy:
Corporate strategy consists of deciding the scope & purpose of the business, its objectives, & the initiatives &
resources necessary to achieve the objectives. Corporate strategies are concerned with how the company can
achieve its growth objectives in current or new business areas.
1. Corporate vision: Vision is an almost “impossible dream” that provides a direction for the company.
Management’s vision defines what the corporation is & what it does & provides important guidelines
for managing & improving the corporation.
2. Objectives: Objectives need to be set so that the performance of the enterprise can be gauged.
Corporate objectives may be established in the following areas: marketing, innovation, resources,
productivity, social responsibility, & finance.
3. Business composition: Defining the composition of business provides direction for both corporate &
marketing strategy design. A business segment, group, or division is often too large in terms of product
& market composition to use in strategic analysis & planning, so it is divided into more specific
strategic units. A popular name for these units is the Strategic Business Unit (SBU). Strategic Business
Unit is a unit of the company that has a separate mission & objectives & that can be planned
independently from other company businesses. It can be a company division, a product line within the
division, or sometimes a single product or brand
4. Resources: It is important to place a company’s strategic focus on its resources- assets, skills, &
capabilities. These resources may offer the organization the potential to compete in different markets,
provide significant value to end-user customers, & create barriers to competitor duplication.
5. Structure, Systems, & processes: Structure determines the composition of the corporation. Systems are
the formal policies & procedures that enable the organization to operate. Processes consider the
informal aspects of the organization’s activities.
1. Defining the corporate mission: Mission is a statement of the organization’s purposes what it wants to
accomplish in the larger environment. To define the mission, the company should address the following
questions:
What is our business?
Who is the customer?
What is of value to the customer?
What will our business be?
What should our business be?
Mission statements are at their best when they are guided by a vision, an almost “impossible dream” that
provides a direction for the company for the next 10 to 20 years.
2. Establishing Strategic Business Units: Strategic Business Unit is a unit of the company that has a separate
mission & objectives & that can be planned independently from other company businesses. It can be a
company division, a product line within the division, or sometimes a single product or brand.
An SBU has three characteristics:
1. It is a single business or collection of related businesses that can be planned separately from the rest of
the company
2. It has its own set of competitors
3. It has a manager who is responsible for strategic planning & profit performance & who controls most
of the factors affecting profit.
3. Assigning resources to each SBU: The purpose of identifying the company’s strategic business units is to
develop separate strategies & assign appropriate funding. Two of the best-known business portfolio evaluation
models are:
Boston Consulting Group (BCG) Approach
General Electric (GE) Approach
The growth-share matrix has two controlling aspect namely relative market share and market
growth rate. It is divided into four cells, each indicating different types of business.
Question Marks: These are products with a low share of a high growth market. They consume
resources and generate little in return. They absorb most money as the company attempt to
increase market share.
Stars: These are products that are in high growth markets with a relatively high share of that
market. Stars tend to generate high amounts of income. The company must spend substantial
funds to keep up with the high market growth, & to fight off competitors attack.
Cash Cows: These are products with a high share of a low growth market. Cash Cows generate
more than is invested in them. So the company should keep them in its portfolio of products for
the time being.
Dogs: These are products with a low share of a low growth market. These are the canine
version of 'real turkeys!’ They do not generate cash for the company, they tend to absorb it. The
company should get rid of these products.
The General Electric Business Screen was originally developed to help marketing managers
overcome the problems that are commonly associated with the Boston Matrix (BCG), such as
the problems with the lack of credible business information, the fact that BCG deals primarily
with commodities not brands or Strategic Business Units (SBU's), and that cash flow if often a
more reliable indicator of position as opposed to market growth/share.
The GE approach introduces a three by three matrix, which now includes a medium
category. It utilizes industry attractiveness as a more inclusive measure than BCG's market
growth and substitute’s competitive position for the original's market share.
Size of market.
Market rate of growth.
The nature of competition and its diversity.
Profit margin.
Impact of technology, the law, and energy efficiency.
Environmental impact.
Market share.
Management profile.
R & D.
Quality of products and services.
Branding and promotions success.
Place (or distribution).
Efficiency.
Cost reduction.
The GE matrix is divided into nine cells, which in turn fall into three zones. The three
cells in the upper left corner indicate strong SBUs in which the company should invest or
grow. The diagonal cells stretching from the lower left to upper right indicate SBUs that
are medium in overall attractiveness. The company should pursue selectivity & manage
for earnings in these SBUs. The three cells in the lower right corner indicate SBUs that
are low in overall attractiveness. The company should give serious thought to harvesting
or divesting these SBUs.
I. The first is to identify opportunities to achieve further growth within current businesses
(Intensive growth opportunities)
II. The second is to identify opportunities to build or acquire businesses that are related to
current businesses (Integrative growth opportunities)
III. The third is to identify opportunities to add attractive businesses tat are unrelated to
current businesses (Diversification growth opportunities)
Intensive Growth Strategies:
Integrative Growth strategies: there are three types of integrative growth strategies:
Downsizing or terminating older business: Companies must not only develop new
businesses, but must also carefully prune, harvest, or divest tired old businesses in order to release
needed resources & reduce costs.
Business Unit Strategy: The business unit strategic planning consists of eight steps:
Many strategy guidelines are offered by consultants, executives, & academics to guide
business strategy formulation. These strategy paradigms propose a range of actions including
re-engineering, TQM, overall cost leadership, building distinctive capabilities, supply chain
strategy, differentiation, focus, strategic partnering, etc.
The Marketing Strategy Process: There are four stages of marketing strategy
process. They are:
Markets, Segments, and Customer value: Markets, segments, & customer value
consider-
Market & competitor analysis: Markets need to be defined so that buyers and
competition can be analyzed. Identifying the product-market, evaluation of
competitor’s strategies, strengths, limitations, and plans is a key aspect of this
analysis.
Strategic market segmentation: Market segmentation offers an opportunity for
an organization to focus its business capabilities on the requirements of one or
more groups of buyers. The objective of market segmentation is to examine the
differences in needs and wants to identify the segments (subgroups) in the
product-market of interest.
Positioning strategy is the combination of the product, value chain, price, and
promotional strategies a firm uses to position itself against its key competitors in
meeting the needs and wants of the market target.
Pricing strategy: Price strategy involves choosing the role of price in the
positioning strategy, including the desired positioning of the product or brand as
well as the margins necessary to satisfy and motivate distribution channel
participants.