Strategy and Marketing Strategy Introduction Concepts

STRATEGY &

MARKETING

Politecnico di Milano

Enrico Pincini 838298

STRATEGY AND MARKETING

STRATEGY

INTRODUCTION CONCEPTS

There are four different concepts about strategic theory:

strategic decision;

strategy;

strategic analysis;

strategic decision process.

STRATEGIC DECISION

A strategic decision is a decision that has long term, significant and non-reversible effects on the final goal of the organization (decision maker) and usually required large amount of resources. It costs significantly in term of time, money and opportunity to achieve a goal.

The focus is also on the effects of your decision: considering the business demand, moving a machinery within a factory is not a strategic decision because doesn’t match the criteria said before, while moving a plant from a place to another, a really significant change, is strategic. Sometimes a no-decision can be a strategic decision: if you don’t decide for a long time you will find difficulties to change in the future, creating barriers. The effect of a decision is fundamental to define if it is strategic or not. Every decision, also the most trivial, have a goal behind, but most of them are not strategic. The strategic one has a fundamental and very important impact on your life and in your path.

STRATEGY

The strategy is an integrated, comprehensive plan which identifies the scope and the direction of the organization (decision maker). It is aimed at obtaining long term performance superior to competitors in relation to the goal and integrates a coherent set of strategic decisions.

The concepts of objectives, strategy and strategic decision are all linked: firstly you have to understand our goal and then you can apply a strategy and thereby doing strategic decision.

STRATEGIC ANALYSIS

The strategic analysis can be of two types: external or internal.

External analysis that is a structural analysis of competitive context and of environmental influences (political, legal, socio-cultural, technological..) and thereby identifies which are the main opportunities and threats for the company.

Internal analysis that is a value chain analysis (of the process) and an analysis of resources and skill and allows to identify which are the main strengths and weaknesses of the company.

The external and internal analysis are together called SWOT analysis.

Example: a consultant should have a subjective point of view in order to support the company in achieving the goal. Its company can focus on different aspects of the company, on its strengths or in its weaknesses and it depends on the characteristic of the company.

An opportunity is an exogenous phenomenal trend that the consultant thinks that it’ll support the company to achieve the goal, while a threat is a phenomenon that would be negative for it.

The SWOT is the starting point to achieve a goal.

This is the logic flow of the strategic decisional process:

The business company in a strategic view is based on the concept of:

strategic business unit;

value proposition;

competitive advantage;

business model.

In order to formulate a concrete strategy of the business.

STRATEGIC BUSINESS UNIT

Usually the companies are complex, and they can be considered as a portfolio of strategic business units, hence a different entities that work in different markets (ex. Google, P&G) and where in each of it have a set of different competitors :

The strategic business unit (SBU) is a part of the company which delivers a defined group of products/services which satisfy specific needs of a specific and homogenous segments of clients and it competes with an identifiable group of competitors (business area). The main basic assumption is that the overall performance of a company, in term of economic value, can be maximized through “independent” SBU strategies and a coherent portfolio strategy. There are two strategy levels:

business strategy;

corporate (portfolio) strategy.

The ability of the Top management is fundamental. It’s very difficult to identify the best organization of business units in a complex company. Only the CFO is able to identify the best criteria of dividing the various SBUs. For each SBUs we have different business strategies and a head, a top manager CFO, that he has to have a clear objective, goal carrying out a SWOT analysis (i.e.) discussing directly with the CEO. To refers to the whole portfolio we can use the term of corporate portfolio and corporate portfolio strategy.

SBU: BUSINESS STRATEGY

The business strategy is an integrated comprehensive plan which identifies the scope and the direction of the organisation (value proposition); it’s aimed at obtaining long-term performance superior to competitors and integrates a coherent set of strategic decisions.

VALUE PROPOSITION

The value proposition consist of a selected bundle of products and/or services that the company want to offer, targeting a specific group of customers (a part of the market), solving a customer problem or satisfying a customer need. The value proposition is related to the single business unit.

I.e. Google with is searching engine (one particular business unit) offer services to its customers:

- advertising used

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