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2-1
Chapter 2 Themes
for Class Discussion
The Marketing Implications
of Corporate and
Business Strategies
McGraw-Hill/Irwin
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
2-2
What do marketers mean
when they say their firms
are
market oriented?
2-3
Does having a market
orientation make sense?
What are the advantages?
What might be the
drawbacks?
2-4
Does having a market
orientation make sense?
What are the advantages?
What might be the
drawbacks?
2-5
What does strategy mean?
• A fundamental pattern of present and
planned objectives, resource deployments,
and interactions of an organization with
markets, competitors, and other
environmental factors.
2-6
The Components of Strategy
•
•
•
•
•
Scope
Goals and Objectives
Resource Deployments
Sources of Competitive Advantage
Synergy
2-7
Hierarchy of Strategy
• Corporate
• Business-level
• Functional
2-8
Corporate Scope
• In defining their strategies, should
companies pursue broadly or narrowly
defined missions?
• What are the advantages of each
approach?
2-9
Corporate Objectives
Four Components:
•
•
•
•
A
A
A
A
performance dimension
measure or index
target to be achieved
time frame
2-10
Corporate Growth Strategies
New
markets
Current
markets
Current products
(Exhibit 2.9)
New products
Market penetration strategies Product development
• Increase market share
strategies
• Increase product usage
Increase frequency of use
Increase quantity used
New applications
• Product improvements
• Product-line extensions
• New products for same
market
Market development
strategies
Diversification strategies
• Expand markets for existing
products
Geographic expansion
Target new segments
• Vertical integration
Forward/backward integration
• Diversification into related bus
(concentric diversification)
• Diversification into unrelated
businesses (conglomerate
diversification)
2-11
Allocating Corporate Resources:
The BCG Growth Share Matrix
(Exhibit 2.10)
High
Stars
Question marks
5
Market
growth
rate
10%
(in
constant
dollars)
4
6
Cash cows
9
2
1
11
Dogs
12
3
7
8
10
13
Low
10
1
Relative market share
Source: Adapted from Barry Hedley, “Strategy and the Business Portfolio,” Long Range Planning 10 (February 1977).
0.1
2-12
Cash Flows Across Businesses in
the BCG Portfolio Model
Growth rate (cash use)
(Exhibit 2.11)
High
Question
marks
Stars
Cash
Flows
Low
Cash cows
High
Dogs
Relative market share
Low
Desired direction of business development
Business’s
competitive position
Tools for Allocating Resources in
Diversified Companies: The GE
Nine-Cell Matrix
Industry attractiveness
High
Medium
Low
High
1
1
2
Medium
1
2
3
Low
2
3
3
1 Invest/grow
2 Selective investment/ maintain position
3 Harvest/divest
2-13
2-14
Sources of Competitive Advantage at
Corporate Level
•
•
•
•
Financial resources
Human resources
Corporate R&D
Organisational processes
2-15
Synergy
• Knowledge-based
• Corporate identity and corporate brand
2-16
Design of Strategic Business Units
• Homogeneous set of markets with a
limited number of related technologies
• A unique set of product-markets
• Control over those factors necessary for
successful performance
• Responsibility for own profitability
2-17
Competitive Advantage: A Key SBU
Issue
Key Questions:
• What is the competitive domain i.e. which
market segments are to be targeted?
• Does the product/ service generate
customer value?
• Do customers appreciate that the product/
service offers superior value?
• Is the advantage difficult for competitors
to copy?