Corporate and Division Strategic Planning

b.
Corporate and Division Strategic Planning

Some corporations give their business units freedom to set their own sales and profit goals
and strategies. Others set goals for their business units but let them develop their own strategies.
Still others set the goals and participate in developing individual business unit strategies.
The Central Role of Strategic Planning

 Successful marketing thus requires capabilities such as understanding, creating, delivering,
capturing, and sustaining customer value.
 To ensure they select and execute the right activities, marketers must give priority to
strategic planning in three key areas:
1. managing a company’s businesses as an investment portfolio,
2. assessing each business’s strength by considering the market’s growth rate and the
company’s position and fit in that market
3. establishing a strategy.
 The company must develop a game plan for achieving each business’s long-run objectives.
 Most large companies consist of four organizational levels: (1) corporate, (2) division, (3)
business unit, and (4) product.
o 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 on which businesses to start or eliminate. Each
division establishes a plan covering the allocation of funds to each business unit
within the division.
o Each business unit develops a strategic plan to carry that business unit into a
profitable future.
o Finally, each product level (product line, brand) develops a marketing plan for
achieving its objectives.
 The marketing plan is the central instrument for directing and coordinating the marketing
effort. It operates at two levels: strategic and tactical.
o The strategic marketing plan lays out the target markets and the firm’s value
proposition, based on an analysis of the best market opportunities.
o The tactical marketing plan specifies the marketing tactics, including product
features, promotion, merchandising, pricing, sales channels, and service. The
complete planning, implementation, and control cycle of strategic planning
All corporate headquarters undertake four planning activities:
1. Defining the corporate mission
 Organizations develop mission statements to share with managers, employees, and
customers. A clear, thoughtful mission statement provides a shared sense of purpose,
direction, and opportunity. Mission statements are at their best when they reflect a vision,
an almost “impossible dream” that provides direction for the next 10 to 20 years.
 Good mission statements have five major characteristics.
o They focus on a limited number of goals.
o They stress the company’s major policies and values.
o They define the major competitive spheres within which the company will operate.
o They take a long-term view.
o They are as short, memorable, and meaningful as possible
2. Establishing strategic business units
 A target market definition tends to focus on selling a product or service to a current market.
A strategic market definition also focuses on the potential market. A business can define
itself in terms of three dimensions: customer groups, customer needs, and technology.
Large companies normally manage quite different businesses, each requiring its own
strategy.
 Businesses were classified into strategic business units (SBUs). An SBU has three
characteristics:
 It is a single business, or a collection of related businesses, that can be planned
separately from the rest of the company.
 It has its own set of competitors.
 It has a manager responsible for strategic planning and profit performance, who
controls most of the factors affecting profit.
 The purpose of identifying the company’s strategic business units is to develop separate
strategies and assign appropriate funding. Senior management knows its portfolio of
businesses usually includes a number of “yesterday’s has-beens” as well as “tomorrow’s
breadwinners.”
3. Assigning resources to each strategic business unit
 Once it has defined SBUs, management must decide how to allocate corporate resources to
each. Several portfolio-planning models provide ways to make investment decisions.
 Portfolio-planning models like these have fallen out of favor as oversimplified and
subjective. Newer methods rely on shareholder value analysis, and on whether the market
value of a company is greater with an SBU or without it.
4. Assessing growth opportunities
 Assessing growth opportunities includes planning new businesses, downsizing, and
terminating older businesses. If there is a gap between future desired sales and projected
sales, corporate management will need to develop or acquire new businesses to fill it.
 The first option is to identify opportunities for growth within current businesses (intensive
opportunities). The second is to identify opportunities to build or acquire businesses related
to current businesses (integrative opportunities). The third is to identify opportunities to
add attractive unrelated businesses (diversification opportunities).

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Corporate and Division Strategic Planning

The Central Role of Strategic Planning

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