1. The Marketing Implications of Corporate and Business Strategies

2. What Is Marketing’s Role in Formulating and Implementing Strategies?
The primary strategic responsibility of any manager is to look outward continuously to keep the firm or business in step with changes in the environment
Marketing managers are primary participants and contributors to the planning process at the business and corporate level

3. Market-Oriented Management
Marketing concept: Holds that the planning and coordination of all company activities around the primary goal of satisfying customer needs is the most effective means to attain and sustain a competitive advantage and achieve company objectives over time

4. Exhibit 2.2 - Guidelines for Market-Oriented Management

5. Does Being Market-Oriented Pay?
An organization’s success over time hinges on its ability to provide benefits of value to its customers and to do that better than its competitors
Organizations should be able to enhance, accelerate, and reduce the volatility and vulnerability of their cash flows:
By paying careful attention to customer needs and competitive threats
By focusing activities across all functional departments on meeting those needs and threats effectively

6. Factors That Mediate Marketing’s Strategic Role
Competitive conditions may enable a company to be successful in the short run without being particularly sensitive to customer desires
Different levels of economic development across industries or countries may favor different business philosophies
Firms can suffer from strategic inertia

7. Exhibit 2.3 - Differences between Production-Oriented and Market-Oriented Organizations

8. Three Levels of Strategy: Similar Components, but Different Issues
Strategy: A fundamental pattern of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors

9. Three Levels of Strategy: Similar Components, but Different Issues
The components of strategy
Scope
Goals and objectives
Resource deployments
Identification of a sustainable competitive advantage
Synergy

10. Three Levels of Strategy: Similar Components, but Different Issues
The hierarchy of strategies
Corporate strategy
Business-level strategy
Functional strategies

11. Exhibit 2.5 - Key Components of Corporate, Business, and Marketing Strategies

12. Exhibit 2.5 - Key Components of Corporate, Business, and Marketing Strategies

13. Corporate Scope—Defining the Firm’s Mission
A good mission statement guides an organization’s managers as to which market opportunities to pursue and which fall outside the firm’s strategic domain
Market influences on the corporate mission
Criteria for defining the corporate mission
Social values and ethical principles
Ethics: Concerned with the development of moral standards by which actions and situations can be judged

14. Exhibit 2.6 - Characteristics of Effective Corporate Mission Statements

15. Corporate Objectives A performance dimension or attribute sought
A measure or index for evaluating progress
A target or hurdle level to be achieved
A time frame within which the target is to be accomplished

16. Exhibit Common Performance Criteria and Measures That Specify Corporate, Business-Unit, and Marketing Objectives

17. Exhibit Common Performance Criteria and Measures That Specify Corporate, Business-Unit, and Marketing Objectives

18. Corporate Objectives
The marketing implications of corporate objectives: Most organizations pursue multiple objectives
Trying to achieve many objectives at once leads to conflicts and trade-offs
Managers can reconcile conflicting goals by prioritizing them
Another approach is to state one of the conflicting goals as a constraint or hurdle

19. Corporate Sources of Competitive Advantage
A sustainable competitive advantage at the corporate level is based on company resources - resources that other firms do not have, that take a long time to develop, and that are hard to acquire

20. Corporate Growth Strategies
A firm can go in two major directions in seeking future growth
Expansion of its current businesses and activities
Diversification into new businesses, either through internal business development or acquisition

21. Exhibit 2.9 - Alternative Corporate Growth Strategies

22. Corporate Growth Strategies
Expansion by increasing penetration of current product-markets
Expansion by developing new products for current customers
Expansion by selling existing products to new segments or countries

23. Corporate Growth Strategies
Expansion by diversifying:
Vertical integration
Forward vertical integration occurs when a firm moves downstream in terms of the product flow
Backward integration occurs when a firm moves upstream by acquiring a supplier
Related (or concentric) diversification
Unrelated (or conglomerate) diversification

24. Allocating Corporate Resources
To exploit the advantages of diversification
Corporate managers must make intelligent decisions about how to allocate financial and human resources across the firm’s various businesses and product-markets
Two sets of analytical tools have proven useful in making such decisions
Portfolio models
Value-based planning

25. Portfolio Models
Enable managers to classify and review their current and prospective businesses by viewing them as portfolios of investment opportunities and then evaluating each business’s competitive strength and the attractiveness of the markets it serves
The Boston Consulting Group’s (BCG) growth-share matrix

26. Exhibit 2.10 - BCG’s Market Growth Relative Share Matrix

27. Exhibit 2.11 - Cash Flows across Businesses in The BCG Portfolio Model

28. Limitations of the Growth-Share Matrix
Market growth rate is an inadequate descriptor of overall industry attractiveness
Relative market share is inadequate as a description of overall competitive strength
The outcomes are highly sensitive to variations in how growth and share are measured
It provides little guidance on how best to implement investment strategies for each business
It assumes that all business units are independent of one another except for the flow of cash

29. Value-Based Planning
A resource allocation tool that attempts to address such questions by assessing the shareholder value a given strategy is likely to create
Economic value added: The amount of return a strategy or operating program generates in excess of the cost of capital
Discounted cash flow model

30. Exhibit 2.12 - Factors Affecting the Creation of Shareholder Value

31. Value-Based Planning Some limitations of value-based planning
It is not a substitute for strategic planning
Good forecasts that are critical to the validity of value-based planning are difficult to make
There are natural human tendencies to overvalue the financial projections associated with some strategy alternatives and to undervalue others
Value-based planning can only evaluate alternatives, but it cannot create them

32. Sources of Synergy Knowledge-based synergies
Performance enhancement through transfer of competencies, knowledge, or customer-related intangibles from other units within the firm
Corporate identity and the corporate brand
Corporate identity flows from the communications, impressions, and personality projected by an organization

33. The Marketing Implications of Business-unit Strategy Decisions
Strategic business units: Components of a firm engaged in multiple industries or businesses
Steps in developing business-level strategies
Deciding how to divide into SBUs
Managers must recommend:
The unit’s objectives
The scope of its target customers and offerings
Which broad competitive strategy to pursue
How resources should be allocated

34. How Should Strategic Business Units Be Designed?
Characteristics of strategic business units
A homogeneous set of markets to serve with a limited number of related technologies
A unique set of product-markets
Control over those factors necessary for successful performance
Responsibility for their own profitability

35. How Should Strategic Business Units Be Designed?
Dimensions that define the scope and mission of the entire corporation also define individual SBUs
Technical compatibility
Similarity in the customer needs
Similarity in the personal characteristics

36. The Business Unit’s Objectives
Corporate objectives typically broken down into subobjectives for each SBU
Breaking down an SBU’s objectives into subobjectives for each of its productmarket entries is often a major part of developing business-level strategy

37. The Business Unit’s Competitive Strategy
Decisions about an SBU’s scope
Allocating resources within the business unit
Gaining a competitive advantage
Marketing resources and competitive advantage

38. Exhibit Three Competitive Strategies and the Traits and Competencies of Businesses That Implement Them Effectively