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Transcript
Chapter 2 Corporate Strategy Decisions and Their Marketing Implications Exhibit 2.1 – Corporate Strategy Components and Issues Exhibit 2.1 – Corporate Strategy Components and Issues Mission Statement Guides managers to identify market opportunities: To be pursued Out side the firm’s strategic domain Helps instill: A sense of direction, relevance, and achievement amongst employees Defines the organization’s strategic scope Exhibit 2.2 - Characteristics of Effective Corporate Mission Statements Social Values and Ethical Principles Important to craft mission statements specifying explicit social values, goals and programs Ethics: Development of moral standards by which actions and situations can be judged Proactive than the law The Marketing Implications of Ethical Standards Unethical practices can: Damage the trust between a firm and its suppliers or customers Disrupt the development of long-term exchange relationships Result in the likely loss of sales and profits over time 2-7 Corporate Objectives Components of an objective Performance dimension Measure or index Target or hurdle Time frame Corporate Objectives Must be SMART Specific Measureable Attainable Relevant Time bound Enhancing Shareholder Value Requires balancing the interests of: Corporate constituencies Employees Customers Suppliers Debt holders Stockholders Enhancing Shareholder Value Management’s primary objective Capital investments Acquisitions Business strategies Enhancing Shareholder Value Requires firm to set explicit objectives Can be expressed in terms of one of the following Economic value added Market value added Objectives are sometimes expressed in terms of market value added (MVA) Dangers of Shareholder Value Objectives Standard accounting measures are not always reliably linked to the true value of a company’s stock Narrow focus on objectives lead managers to Pay little attention to actions necessary to provide value to the firm’s customers and sustain a competitive advantage The Marketing Implications of Corporate Objectives Managers can reconcile conflicting goals by Prioritizing them Stating one of them as a constraint Customer-focused objectives Satisfaction Retention Loyalty 2-14 Competitive Advantage Is based on company resources that: Other firms do not have Take a long time to develop Are hard to acquire Requires developing a: Competitive strategy for each division Strategic marketing program for each product 2-15 Competitive Advantage Should provide one or more superior benefits Should be effectively communicated to potential customers Corporate Growth Strategies Directions that firms can go for future growth Expansion of its current businesses and activities Diversification into new businesses Exhibit 2.5 - Alternative Corporate Growth Strategies Allocating Corporate Resources Sets of analytical tools are used in making decisions Portfolio models Value-based planning Models that measure customer equity Portfolio Models The Boston Consulting Group’s (BCG) growth-share matrix Market growth rate: Proxy measure for the maturity and attractiveness of an industry Relative market share: Proxy for its competitive strength within its industry Exhibit 2.6 - BCG’s Market Growth Relative Share Matrix Exhibit 2.7 - Cash Flows across Businesses in BCG Portfolio Model Value-Based Planning Method Resource allocation tool that: Addresses questions pertaining to worthiness of businesses by assessing the shareholder value a given strategy is likely to create Provides a basis for comparing the economic returns Value-Based Planning Assess the economic value of a strategy by examining the cash flows it will generate Estimate the shareholder value produced by: Discounting forecasted cash flows by the business’s risk-adjusted cost of capital Value-Based Planning Evaluates strategies based on the likelihood that: Investments required by a strategy will deliver returns greater than the cost of capital Exhibit 2.8 - Factors Affecting the Creation of Shareholder Value Using Customer Equity to Estimate the Value of Alternative Marketing Actions Calculates the economic return for a prospective marketing initiative based on: Its likely impact on the firm’s customer equity Sources of Synergy Knowledge-based synergies Function of the corporation’s scope and mission Corporate identity and the corporate brand Flows from the communications, impressions, and personality projected by an organization Corporate Branding Strategy Company’s own name and logo serves as the brand na me of all or most of the firm’s products Dual branding strategy - Each offering carries a corporate identifier and an individual product brand Each product offering might be given a unique brand and identity Synergy from Shared Resources Inherent in sharing operational resources, facilities, and functions across business units Helps increase economies of scale or experience-curve effects