Marketing Management

Module-1
Lesson # 5
Strategic Planning
 Strategic Planning:
• Strategic planning is concerned with the growth and
future of a business enterprise.
• It consists of a stream of decisions and actions that lead
to effective strategies and which, in turn, help the firm
achieve its growth objectives.
• The process involves a thorough self-appraisal by the
corporation, including an appraisal of the business it is
engaged in and the environment in which it operates.
• Marketing environment keeps changing fast. Practically
everything outside the four walls of the firm is changing
fast, resulting in a discontinuity with the past.
• Strategic planning provides the road map and ensures
that the enterprise keeps moving in the right direction.
 Strategic Planning (contd.)
Starting from the corporation’s mission and philosophy, down to choice
of businesses and strategies, all vital aspects in the governance of
business are chartered through strategic planning.
It is through strategic planning that the corporation takes decisions
concerning its mission, the business it will pursue and the markets it
will serve; it is through strategic planning that it lays down its growth
objectives and formulates its strategies.
In other words, all decisions of high significance and consequence to a
corporation are taken through the strategic planning process.

Strategic planning ensures that these resources are put to optimum

and best possible use.
Strategic planning helps the firm acquire the best of a lead time for all
its crucial decisions and actions, as it helps the firm anticipate
trends.
Strategic planning has the burden of equipping a corporation with the
relevant competitive advantages in its fight for survival and growth.
Objectives of Strategic Planning:
Strategic Planning is concerned with the

c) Future or long-term dynamics of the firm; not day-to-day tasks.

d) Growth – direction, extent, pace and timing of growth.
e) Environment, the fit between the enterprise and its environment.
f) Business portfolio - Basket of businesses the firm should have –
changes/additions/deletions to the firm’s product-market
posture.
g) Its concern is strategy – not routine operational activities – growth
priorities, choice of corporate strategy and choice of business
level/competitive strategy are its concern.
h) Creation of core competencies and competitive advantages, is its
concern. This equips the organization with capabilities needed to
face uncertainties.
i) Integration of all management functions – not a particular
function. It views the organization/business in its totality.
j) Corporate strategy – creating long-term, sustainable
organizational capability.
 Components of Strategic Planning:

1. Clarifying the mission of the corporation

2. Defining the business
3. Surveying the environment
4. Internal appraisal of the firm
5. Setting the corporate objectives
6. Formulating the corporate strategy.
 1. Clarifying the mission of the corporation
• The mission is the expression of the corporate intent telling insiders
and outsiders what the corporation stands for.

• The mission carries the grand design of the firm and communicates
what it wants to be. It subtly indicates the business the firm will
pursue and the customer needs it will seek to satisfy.

• The mission is shaped by the capabilities and vision of the

corporation’s leaders.

• The business philosophy of the founder and present leaders of the

corporation gets expressed through the mission statement.

• The mission directs the entire planning endeavour of a corporation.

• The mission is a reference point and the guiding spirit for the growth
plan of a firm.

• It brings the corporate purpose or the long-term objective of the firm

into focus.
 2. Defining the business
• A business definition is a pithy, clear-cut statement of the business
or businesses the firm is engaged in or is planning to purse. It
prescribes the boundaries of the firm’s business.

• Defining the business correctly is the pre-requisite for selecting the

right opportunities and steering the firm on the correct path. Even to
understand what constitutes its relevant environment and to make
the environmental search effective, the firm must have a proper
definition of the business it is in.

• Defining one’s business has become an exacting exercise today

because of the fast changes taking place in the areas of technology,
products and customer preference.
• When product-market boundaries get extended, when different
product categories of yesteryears blend and merge, and when new
and substitute products keep invading the market altering existing
business boundaries, understanding and defining one’s business
becomes very difficult.
 3. Surveying the environment
• Today strategic planning occupies the central stage in management
purely because a great deal of change is taking place in the
environment.
• In environmental survey, basically a firm gathers all relevant
information and analyses it in detail. It analyses the macro
environmental factors as well as the environmental factors that are
specific to the business concerned. Under the macro factors, the
firm studies the demographic, socio-cultural and economic scene. It
also studies the political environment, the legal environment and the
government policies covering various areas.
• As for the environmental factors that are more specific to the
business, the firm studies the emerging trends in the industry, the
structure of the industry and the nature of the competition. It also
studies the market and the customer closely. It examines alternative
technologies that are emerging, their relative cost-effectiveness, and
the scope for invasion by substitutes.
• The significant point is that under environmental study, the firm does
not confine the study to the existing business but looks beyond it,
because both opportunities and threats can emerge from many
difference sources.
 4. Internal appraisal of the firm
• While environmental survey helps to identify
areas of opportunities and threats in the areas of
interest, in order to tap these opportunities, it is
necessary to find out whether the firm has the
requisite capabilities. For this an internal
appraisal is undertaken.
• Internal appraisal has three distinct parts:
– assessment of the strengths and weaknesses of the
firm in different functional areas;
– appraisal of the health of individual businesses;
– assessment of the firm’s competitive advantage and
core competence.
 5. Setting the corporate objectives
• The main task here is to decide the extent of business
growth, the firm wants to achieve. The firm examines the
present level of performance, its achievable level over
the planning period, and its aspirational level. Balancing
the opportunities with the organization’s capabilities and
ambitions, the firm figures out its growth objective.
Usually, firms set objectives in all key areas, like, sales,
profits, asset formation, productivity, market share, and
corporate image.
• Objectives have to be stated clear-cut in a measurable
time-bound manner. In setting objectives, the firm
integrates its growth ambition with the findings it has
made with its environment survey and internal appraisal.
 6. Formulating the corporate strategy
Product-market scope, growth vector, competitive
advantage and synergy are the constituents of corporate
strategy. Findings from the environment
survey/opportunity-threat profile, the competitive
advantages and synergies enjoyed, and the resources
available for growth, are the other major parameters in
deciding the basket of businesses and the product-
market posture. Corporate strategy has to specify
through which businesses and through what kind of
product-market posture is the growth objective going to
be achieved. And it is from this statement that each
business of the corporation –existing and new ones –
derives its growth targets, direction and priority.
 Formulating the corporate strategy (contd.)

• Business appraisal and choice of strategy go hand in

hand. The firm decides which businesses are to be
cultivated through fresh investment and care, which ones
are to be given mere maintenance, without committing
much further investment and which businesses it should
phase out. Standard analytical models can be of help to
the strategic planner, in the matter of bringing to the fore
what needs to be done with the different businesses.
• Most large companies consist of four organizational
levels – the corporate level, the Division level, the
business unit level and the product level.
 Formulating the corporate strategy (contd.)

• Corporate headquarters is responsible for designing a

corporate strategic plan to guide the whole enterprise; it
makes decisions on the amount of resources to allocate
to each division; as well as which business to start or
eliminate.
• Each Division establishes a plan covering the allocation
of funds to each business unit within the division.
• Each Business Unit develops a strategic plan to carry
that business unit into a profitable future.
• Each product level (product line, brand) within a
business unit develops a marketing plan for achieving its
objectives in its product market.