Understanding of current scenario

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1. STRATEGIC & MARKETING ANALYSIS.

1.1 Introduction and Overview of Strategic Marketing.

Strategic management model: steps in strategic management.

Marketing is a major and critical function of business, a significant bridge between

market and the company. Strategies for marketing are a part of strategic plan for the
entire company.

Understanding the business of a company is the primary task of strategic

management process. Does it mean, that traditionally managed companies who
have succeeded by rule, had all these jargons of strategic analysis, perspective,
planning etc., YES and NO.

NO – the formative years of industrialization, industrial revolution’s focus was more

on “RE-BUILDING” what perished in the world war –II. Hence it was more of
“providing” the basic needs of the customers/consumers at manufacturer’s will and
capacity rather than the timely / precise needs of the customer, the end user.

There is a time tested truth about business management which substantiates the need
for strategic management, “IF WE DO WHAT WE DID, THERE ARE LITTLE
CHANCES THAT WE GET WHAT WE GOT”. Continuous improvement (Kaizen)
in all the processes of management would yield better and sustainable results.
Change is the only permanent factor in business management. Change demand
change.

There are a host of centurion companies, which have survived and grew in spite of
environmental turbulences in terms of economy, technology, culture, societal
variances, demographic and geographic variations.

Anyone is in business for survival, growth and profits. Survival and growth are just
not a natural process. Growth just does not happen by inertia of past successes and
glories. We have examples of companies with inertia, vanishing in the thin air, in
spite a glorious past.

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While current levels of operations, profits, growth could be an indicator or a referral
for future, it cannot guarantee. Here comes the need for – “While Running the
Business Now, Think Of the Future”

No one is alone in business for ever. Even early bird advantage is diminishing
in today’s business environment. Past does not guarantee future.

1.2 Evolution of Strategic Management Systems:

Budgeting Long range Strategic Strategic

plans planning market
management
Management Control Anticipate Change Anticipate the
emphasis deviations and growth and strategic thrusts uncertainties,
manage manage and capability - fast developing
complexities complexity threats and
opportunities.
Moving away
from traditional
known to known
TO known to
unknown
businesses
Assumptions Past repeats Based on New trends and Planning cycles
trends in the discontinuities are inadequate to
near past are predictable. deal with rapid
years. changes.
Process Periodic and Less external Environment Preemptive
intuitive based factors inputs, internal strategies, re-
on past considered, analysis, vitalizing the
performance more of benchmarking resources, re-
internal with the best, engineering
strengths market driven business
based plans - approach in re- processes.
formulating
strategies
including risk
taking.
Time period 1900’s 1950’s 1970’s 1990’s

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Re-visiting our strategic thinking process: we need to critically examine the
questions before re-thinking on changes:

CONCEPT OF What are our values? How have we segmented

SERVED MARKETS our market? What kind of customers we serve? Where
Are our customers?
REVENUE & Where in the business systems we take profit? Where
MARGIN STURCTURE Do our margins come from? What has determined our
Size of our margins? What are costs – price drivers?

CONFIGURATION OF What is the process e know to do the best in the class?

SKILLS AND ASSETS What infrastructure supports our business?
What skills predominates?
What is the trajectory of our development spending?

FLEXIBILITY &
ADAPTATIVENESS How alert are we to new value delivery models?
How easily could investment programmes be re-oriented?
How easily could the infrastructure be re-configured?
Which constituencies would offer
most resistance to change?

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 WHY COMPANIES FAIL??

Accumulation of Optimised Success

Unparalleled track
Abundant resources Business Controls
Of success.
Systems Strategy.

No gap between Momentum

Assets will Deeply etched
Expectations & Mistaken for
Win - out recipes
Performance. leadership

Complacent with Resources

Vulnerability to Failure to
Current Substitutes for Reinvent
performance Creativity New Ideas
leadership

INABILITY TO ESCAPE INABILITY TO INVENT

PAST GLORIES THE FUTURE

Strategic management is a stream of decisions and actions which leads to the

development of an effective strategy or strategies to help achieve corporate
objectives. The strategic management process is the way in which strategists
determine objectives and make strategic decisions.

Strategic decisions are means to achieve ends. These decisions encompass the
definition of the business, products and markets to be served, functions to be
performed, and major policies needed for the organization to execute these decisions
to achieve objectives.

Policies are guides to action. They indicate how resources are to be allocated and
how tasks assigned to the organization might be accomplished so that functional-
level managers execute strategy properly.

Understanding a company's strategy and effectiveness is not easy. It requires that

you look at how the company has come to grips with the challenges and
opportunities facing it. It requires that you make judgments about whether the
business or other organization is well run and how to improve its operations and
results. This is a challenging job, the job of top managers of divisions or companies.
It will provide you with a new understanding of how companies succeed or fail.

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1.3 What Is Business Policy And Strategic Management?

Instead of focusing all their time on today, managers began to see the value of
trying to anticipate the future and to prepare for it. They did this in several ways.

Budgeting and control systems helped, but they tended to be based on the status quo
- the present business and conditions-and did not by themselves deal well with
change. These systems did provide better financial controls. Later variations
included capital budgeting and management-by-objectives systems.

Because of the lack of emphasis on the future in budgeting, long-range planning

appeared. This movement focused on forecasting the future by using economic and
technological tools. Long-range planning tended to be performed primarily by
corporate staff groups, whose reports were forwarded to top management.
Sometimes their reports and advice were heeded [when they were understood and
were credible]; otherwise, they were ignored. Since the corporate planners were not
the decision makers, long-range planning had some impact, but not as much as
would be expected if top management were involved. Then, too, they were
producing first-generation plans.

"First-generation planning" means that the firms choose the most probable appraisal
and diagnosis of the future environment and of its own strengths and weaknesses.
From this, it evolves the best strategy for this match of the environment and the firm
- a single plan for the most likely future.

Today's strategic management has parts to be played by the board of directors and
corporate planners. But the starring roles are for the top managers of the corporation
and its major operating divisions.

Strategic management focuses on "second-generation planning": analysis of the

business and the preparation of several scenarios for the future. Contingency
strategies are then prepared for each of these likely future scenarios.

Strategic management is a stream of decisions and actions which leads to the

development of an effective strategy or strategies to help achieve corporate
objectives. The strategic management process is the way in which strategists
determine objectives and make strategic decisions.

Strategic decisions are means to achieve ends. These decisions encompass the
definition of the business, products and markets to be served, functions to be

Bharat
performed, and major policies needed for the organization to execute these decisions
to achieve objectives.

Policies are guides to action. They indicate how resources are to be allocated and
how tasks assigned to the organization might be accomplished so that functional-
level managers execute strategy properly.

1.4 What Is Strategy?

Strategy is the direction and scope of an organization over the long term, which
achieves advantage for the organization through its configuration of resources
within a challenging environment, to meet the needs of markets and to fulfill
stakeholder expectations”

A strategy is the means used to achieve the ends(objectives). A strategy is not just
any plan, however. A strategy is a plan that is unified: it ties all the parts of the
enterprise together. A strategy is comprehensive: it covers all major aspects of the
enterprise. A strategy is integrated: all the parts of the plan are compatible with each
other and fit together well.

A strategy is a unified, comprehensive, and integrated GUIDING FACTOR that

relates the strategic advantages of the firm to the challenges of the environment and
that is designed to ensure that the basic objectives of the enterprise are achieved
through proper execution by the organization.

A game plan is not exactly a strategy, however. A game plan is oriented toward one
game. A strategy for a firm is a long- run plan. A game plan is oriented against one
competitor only. A firm deals with a number of competitors simultaneously and
with the government, suppliers, owners, labor unions, and others.

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Strategic Management – Model -1

Strategic MARKETING - Components

ENV. STRATEGY Evaluation &

STRATEGY FORMULATION
SCAN IMPLEMENTATION monitoring

External: MISSION OBJECTIVES Strategic Planning

-Economic
-Societal STRATEGIES Plans & Programmes Performance
-Political Marketing Measures
- technology • BENCH MARKING Technology Feed back
• CORE COMPETENCE Operations
Industry System
•COMPETITIVE ADVANTAGE Financials
Competition MIS
• BUSINESS HRM
SWOT • FUNCTIONAL ITES
• OPERATIONAL Quality mgt.
INTERNAL
-Structure Processes
POLICIES
-Culture
-SWOT Broad guidelines
- Resources For decisions
making

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Strategic Marketing Process. Model -2

ENVIRONMENTAL
SCANNING

INDUSTRY AND
COMPETITION ANALYSIS

COMPANY SWOT
ANALYSIS.

VISION, MISSION, POLICIES,

VALUES AND OBJECTIVES OF FEED BACK
SURVIVAL AND GROWTH

STRATEGY
FORMULATION

STRATEGY
IMPLEMENTATION

EVALUATION &
CONTROL

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Strategic Marketing Process –Model-3

External environment Firm’s INTERNAL

analysis: strengths and
Opportunities and weakness
threats

Economic Analysis of Current

Technological status of the business –
Social and cultural company’s image,
Political and legal products, technology,
Environmental brand image, Returns
Global scenario on investment, sources
of funds, market
Industry analysis: capitalization ability,
Competitive forces production capacity,
Emerging trends: marketing ability,
Global scenario human resource
capital,

Competition analysis:
competitor’s SWOT Competitive strength
and competitive
advantage of the firm.

Emerging global Company: Mission,

scenario: vision, values and

Strategy evolution:
Choices

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1.5 Changes in environment could create barriers for the traditional marketing
mix.

Barriers for marketing mix:

P1 Product:

ƒ Environment: economical, political, government policies.

ƒ Technical: capital goods investment.
ƒ Cost of quality, product portfolio.

P2 Place:
ƒ access to channels, buyer behavior, and disposable incomes-
segment- wise.
ƒ Competition intensity, logistic costs.
ƒ Industry status, business position.
ƒ Taxation, capital gains
P3
Promotion:
ƒ culture of buyer groups, education, societal structure (decision
makers, perception of utilities v/s needs, cost of
communication,
ƒ reach, effectiveness, changes in culture, heritage and values
ƒ Communication logistics, variety and variances, differentiation
and
ƒ focus

P4 Price:

ƒ affordability, deployment of income (priorities), source of

income, reality v/s
ƒ assumptions of needs, values
ƒ (Spend today earn tomorrow)

We need to critically examine these factors and identity the current situation and
anticipate for the future. The marketing mix analysis would expose the gaps with
respect to future challenges. Newer technologies, better informed buyer, cultural
changes, priorities of the buyer, consumerism, organisation buying, creation of
opportunities through Merers, acquisitions, joint ventures, strategic alliances, and
globalization of products and services would pose different challenges and create
barriers for the existing marketing mix.

Bharat
The following diagram illustrates the transformation of marketing process from buy
what I sell to creating customer values through products and services in the
millennium.

Transformation
Creating customer
Buy what I sell values through strategic
marketing

Design Choose the value

Procure Make
Produce Customer segmentation
Test Strategic
Marketing
Price
Marker selection & focus
Pack
Advertise Selling
Distribute Value positioning
Sell
Service Provide value

Product development

Tactical
Marketing Pricing and positioning

Sourcing & making

Distribution & servicing

Communicating the value

Sales force

Sales promotion

Advertising

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