Mmi vii a company analysis
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The document discusses key concepts related to business strategy including core competencies, capabilities, strategic planning, and defining a company's mission and vision. The main points are: 1) A firm's success depends on having distinctive capabilities and core competencies that are difficult for competitors to imitate. These provide the strategic platform for the business. 2) It is important to define what business a company is truly in based on customer needs, rather than just products. The mission statement should communicate the company's core values, purpose, and goals. 3) Developing the right marketing strategy is key to exploiting a company's strengths and selecting the right target markets that fit its capabilities.
Mmi vii a company analysis
- 1. The smart competitor • Must design and deliver offerings for well – defined markets. This belief is at the core of the new view of business processes and places Marketing at the beginning of planning. • Thus the modern emphasis of firms has changed from making and selling to being part of the value delivery process.
- 2. Value Creation and delivery sequence A 3 part process : Choosing the value-Segment the market, select the target market, develop the product’s value positioning. STP is the essence of Strategic Marketing.
- 3. The firm’s task • To examine its cost and performance in each value- creating activities and look for ways to improve it. • The firm should estimate its competitor’s costs and performances as benchmarks for evaluating its own performance. To achieve excellence it should study the “best of class” practices of the world’s best companies.
- 4. A firm’s success • Will depend not only on how well each department performs its own duties but also how well various inter- departmental activities are coordinated to conduct core business processes.
- 5. Capabilities and Core competencies • Capability-based strategies are based on the notion that internal resources and core competencies derived from distinctive capabilities provide the strategy platform that underlies a firm's long-term profitability.
- 6. Evaluation of these capabilities begins with a company capability profile, which examines a company's strengths and weaknesses in four key areas: • Managerial • Marketing • Financial • Technical
- 7. Then a SWOT analysis is carried out to determine whether the company has the strengths necessary to deal with the specific forces in the external environment. This analysis enables managers to identify: External threats and opportunities, and Distinct competencies that can ward off the threats and compensate for weaknesses. The picture identified by the SWOT analysis helps to suggest which type of strategy, or strategic thrust the firm should use to gain competitive advantage.
- 8. Stalk, Evans and Schulman (1992) have identified four principles that serve as guidelines to achieving capability-based competition: Corporate strategy does not depend on products or markets but on business processes. Key strategic processes are needed to consistently provide superior value to the customer. Investment is made in capability, not functions or SBUs. The CEO must champion the capability-based strategy.
- 9. • Capability-based strategies, sometimes referred to as the resource-based view of the firm, are determined by (a) those internal resources and capabilities that provide the platform for the firm's strategy and (b) those resources and capabilities that are the primary source of profit for the firm. • A key management function is to identify what resource gaps need to be filled in order to maintain a competitive edge where these capabilities are required.
- 10. Several levels can be established in defining the firm's overall strategy platform
- 11. • At the bottom of the pyramid are the basic resources a firm has compiled over time. They can be categorised as technical factors, competitive factors, managerial factors, and financial factors. • Core competencies can be defined as the unique combination of the resources and experiences of a particular firm. It takes time to build these core competencies and they are difficult to imitate.
- 12. Critical to sustaining these core competencies are their: • Durability - their life span is longer than individual product or technology life-cycles, as are the life spans of resources used to generate them, including people. • Intransparency - it is difficult for competitors to imitate these competencies quickly. • Immobility – these capabilities and resources are difficult to transfer.
- 13. Core competencies • In today’s world the key to efficiency for a company is to own and nurture critical competencies that make up the essence of the business and outsource less critical resources if they can be obtained at better quality or lower cost. • Many companies outsource landscaping, cleaning, transport management, data processing.
- 14. Core Competencies • A core competency is a specific factor that a business sees as being central to the way it, or its employees work. It fulfils three key criteria: • It provides consumer benefits • It is not easy for competitors to imitate • It can be leveraged widely to many products and markets.
- 15. • A core competency can take various forms, including technical/subject matter know-how, a reliable process and/or close relationships with customers and suppliers. It may also include product development or culture, such as employee dedication.
- 16. • Core competencies are particular strengths relative to other organizations in the industry which provide the fundamental basis for the provision of added value e.g Nike : Shoe designing and shoe merchandising. • Core competencies are the collective learning in organizations, and involve how to coordinate diverse production skills and integrate multiple streams of technologies.
- 17. Core competence is something a company does especially well relative to its competitors. • Honda, for example, has a core competence in small engine design and manufacturing • Sony has a core competence in miniaturization • Federal Express has a core competence in logistics and customer service. Typically, a core competence refers to a set of skills or experience in some activity, rather than physical or financial assets.
- 18. • Microsoft has the core competence of designing office software products that are user-friendly. • PepsiCo has a core competence of mass production and distribution of bottled drinks. • Polaroid has a core competence in manufacturing immediately self-developing film. • Ernst & Young has the core competence of performing audit functions for Fortune 500 corporations. • One of Wal-Marts core competencies is their massive real-time information system.
- 19. Utilization of core competencies • A company's core competencies can be applied to the development of new and creative products or services and markets. • Microsoft could use its core competence to develop user-friendly video games. • PepsiCo could use its core competence of bottling and distribution to bottle and distribute medicines or hair care products
- 20. • Few companies are likely to build world leadership in more than five or six fundamental competencies.
- 21. Core business processes Market sensing ( gathering market intelligence) New offering realization ( R&D and launching new , high quality offerings quickly and within budget) Customer acquisition ( defining target markets and prospecting for new customers) CRM ( building deeper understanding, relationships and offering to individual customers) Fulfillment management( receiving orders, shipping goods, receiving payment)
- 22. Strong Companies • Develop superior capabilities in managing and linking their Core Business Processes. • Re- engineer the work flow and build cross – functional teams responsible for each process. • To be successful a firm needs to look for competitive advantages beyond its own operations into the value chain of suppliers, distributors and customers.
- 23. Market driven organizations Excel at : • Market sensing • Customer linking • Channel bonding • Competitive advantage derives from how well the company has fitted its core competencies and distinctive capabilities into tightly locking activity systems.
- 24. Defining the Business • What business are we in ? • Theodore Levitt encouraged market definitions of a business rather than product definitions, since products are transient but basic needs and customer groups endure.
- 25. • His view was that a business must be viewed as a customer satisfying process rather than a goods producing process. • Thus transportation is a need : a car, a bike or an airplane are products that meet the need. • IBM redefined itself from a hardware and software manufacturer to a builder of networks. • Encyclopedia Brittanica : from we sell encyclopedias to we market information. • Pepsi : We sell cold drinks to quench thirst. • Gati : from deliverers of small cargo to - We service your need for time bound deliveries of your package.
- 26. Concept of SBUs An SBU has three characteristics : • It is a single business or related businesses that can be planned apart from the rest of the company. • It has its own set of competitors • It has a manager who is responsible for planning and profit. The whole idea behind this concept is to give focus to each – to develop separate strategies and assign funding.
- 27. Strategic alliances • Even giant companies like AT &T,IBM, Siemens, need strategic partnerships for effective market coverage to complement or leverage their capabilities and resources.
- 28. Strategic alliances • Product or service alliances eg. Hindustan lever with Pepsico to bottle and market Lipton Iced tea in glass bottles. • Promotional alliances eg, P&G using endorsements of Bombay Dyeing to promote Ariel detergent. • Logistics alliances – Gati and Indian Airlines • Pricing collaborations : Airlines, hotels, car rental companies combine to give an attractive package to customers.
- 29. Company Analysis What is Corporate success and how should it be measured ?
- 30. Corporate Success • Size ? • Sales ? • Market share ? • Stock exchange value ? • ROI ? • Growth ? • P/E ratio ?
- 31. Added Value • The key measure of corporate success is added value : The difference between a firm’s output and the cost of its inputs.
- 32. Value addition is measurable • Microsoft Corporation, Added ( US $ Millions),1992 • Value of output 2750 • Wages and salaries 400 • Cost of capital employed 50 • Cost of materials 1650 • Total input 2100 • Added Value 650
- 33. Who is interested in the Company’s success ? • Employees / present and prospective • Investors • Customers • Competitors • Suppliers • Analysts / Business professionals • Government Agencies
- 34. Corporate successes • The key lesson from histories of Corporate successes is that corporate success is based on an effective match between a firm’s external relationships and its distinctive capabilities.
- 35. Foundations of Success Disney BMW Honda Microsoft All the above firms identified their distinctive capabilities, selected the markets best suited to their strengths, and built effective competitive strategies to exploit them. All these companies were adept at adding value.
- 36. Examples of failure • IBM with the most rewarding distinctive capabilities ever enjoyed by any corporation, saw its markets develop in a way that steadily diminished the value of the competitive advantages it derived from them. • Saatchi and Saatchi, once the best known advertising agency in the world, over – extended themselves and diminished in value trying to shift from international recognition to creating an international business.
- 37. Marketing Strategy • No Marketing strategy is possible without reference to the overall planning of a company. Corporate plans Functional Plans e.g. marketing Sub Functional Plans e.g. Sales Advertising etc.
- 38. Development of a marketing strategy • All strategy formations impact on each other. • Selection of a target market and developing a marketing mix are inter-related. • Both parts of a marketing strategy must be decided together. • Strategies must be evaluated against the company’s objectives not versus alternate target markets or alternate marketing mixes.
- 39. The Company Vision and Mission • While a company is continually adapting to it competitive environment certain core ideals remain relatively steady and guide its strategic decision making process. • These unchanging ideals form the Business Vision and are expressed in the company Mission statement.
- 40. Some Vision statements Avon To be the company that best understands and satisfies the product, service and self- fulfillment needs of women - globally DuPont The vision of DuPont is to be the world's most dynamic science company, creating sustainable solutions essential to a better, safer and healthier life for people everywhere.
- 41. Coal India Limited To emerge from the position of domestic leader to leading global player in the energy sector by adopting best practices from mine to market with due care to environmental and social sustenance.
- 42. TATA STEEL The long journey of Tata Steel has seen the Company re-define its performance parameters in a number of ways to become the global steel industry benchmark for value creation and corporate citizenship. It ensures a total commitment to its ethical business practices and a people oriented vision. Vision We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship
- 43. Mission Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives to strengthen India’s industrial base through the effective utilization of staff and materials. The means envisaged to achieve this are high technology and productivity, consistent with modern management practices. Tata Steel recognizes that while honesty and integrity are the essential ingredients of a strong and stable enterprise, profitability provides the main spark for economic activity. Overall, the Company seeks to scale the heights of excellence in all that it does in an atmosphere free from fear, and thereby reaffirms its faith in democratic values.
- 44. We make the difference through • Our People • By fostering teamwork, nurturing talent, enhancing leadership capability and acting with pace, pride and passion. • Our Offer By becoming the supplier of choice, delivering premium products and services and creating value for our customers. • Our Innovative Approach By developing leading edge solutions in technology, processes and products. • Our Conduct By providing a safe workplace, respecting the environment, caring for our communities and demonstrating high ethical standards.
- 45. IKEA The IKEA vision is to create a better everyday life for the many people. We make this possible by offering a wide range of well-designed, functional home furnishing products at process so low that as many people as possible will be able to afford them.
- 46. • Unilever The four pillars of our vision set out the long-term direction for the company – where we want to go and how we are going to get there: • We work to create a better future every day. • We help people feel good, look good and get more out of life with brands and services that are good for them and good for others. • We will inspire people to take small everyday actions that can add up to a big difference for the world.
- 47. • We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact. We've always believed in the power of our brands to improve the quality of people’s lives and in doing the right thing. As our business grows, so do our responsibilities. We recognise that global challenges such as climate change concern us all. Considering the wider impact of our actions is embedded in our values and is a fundamental part of who we are.
- 48. A Vision statement by definition is something you want to become, to achieve, it is a seductive image of an ideal future – whereas a Mission statement explains the purpose of the organization – why it exists – it captures the organization’s soul.
- 49. • The mission statement helps to set the course but needs to translate itself into more specific objectives which must of course be consonant with the mission statement.
- 50. The Mission statement • Communicates the firm’s core ideology and visionary goals and generally consists of the following three components: a) Core Values to which the firm is committed b) Core purpose of the firm c) Visionary goals the firm will pursue to achieve its mission
- 51. The company’s mission statement Fred Smith wanted to deliver mail anywhere in the US before 10.30 am. This was his Vision. Fedex states as its mission statement “ People, Service, Profit”. “The core philosophy that governs every activity at FedEx Express is People-Service-Profit (PSP): Take care of our people; they in turn will deliver impeccable service demanded by our customers, who will reward us with the profitability necessary to secure our future. People-Service-Profit: These three words are the very foundation of FedEx Express.”
- 52. Infosys : Putting it all together • Who we are Our Vision, Mission and Values • Vision "We will be a globally respected corporation.“ • Mission "Strategic Partnerships for Building Tomorrow’s Enterprise.“ • Values We believe that the softest pillow is a clear conscience. The values that drive us underscore our commitment to:
- 53. CLIFE • Client Value: To surpass client expectations consistently • Leadership by Example: To set standards in our business and transactions and be an exemplar for the industry and ourselves • Integrity and Transparency: To be ethical, sincere and open in all our transactions • Fairness: To be objective and transaction- oriented, and thereby earn trust and respect • Excellence: To strive relentlessly, constantly improve ourselves, our teams, our services and products to become the best
- 54. Purpose of the Mission statement These are developed to share with managers, employees, and customers. It gives them a shared sense of purpose, direction and opportunity. It guides geographically separated employees to work independently and yet collectively towards a single goal.
- 55. Mission statements: Ideally three major characteristics 1. Limited number of goals 2. Stress the companies major policies and values 3. Define the major competitive spheres in which the company will work.
- 56. The three basic objectives of companies 1. Engaged in specific activities performing a socially and economically useful function. 2. Developing an organization to carry on business and implement strategies. 3. Earn enough profit to survive and to grow
- 57. Company Objectives should lead to Marketing Objectives • Company objectives guide managers in searching and evaluating opportunities and later planning marketing strategies. • Particular marketing objectives must be set within the framework of larger company objectives • Thus the hierarchy of objectives moves from company objectives down to marketing department objectives • For each marketing strategy firms need objectives for each of the 4 Ps as well as more detailed objectives within each of these areas.
- 58. Corporate Involves applying business planning to different units Business Involves other resources required for identified markets Mkting. Based on Markets/Custo mers/Products
- 59. Marketing Planning within the Corporate cycle • Corporate Financial Objectives • Management Audit • Objective and Strategy Planning • Functional Plans (including Marketing Plan) • Corporate Plans
- 60. The Marketing Plan • The Marketing Plan is a written statement of marketing strategy and gives time – related details • It is necessary to know what needs to be done and fills out the marketing strategy. • It is a guide to implementation and control
- 61. Need for a Marketing Plan • It ensures the coordination of all activities in the marketing function and sees that all individual efforts complement each other.
- 62. Broad Components of a Marketing Plan • A) The Marketing Mix offered Target Market For How Long ? • B) Co. resources ( shown as cost ) needed monthly/qtly • C) Results Expected ( Sales /Profits / Customer Service/ Control Procedures)
- 63. Stages in a Marketing Plan • Mission • Corporate Objectives • Marketing Audit • SWOT analysis • Assumptions • Marketing Objectives and Strategies • Estimated Expected results • Identify Alternative plans and budgets • Budget • First year detailed implementation program
- 64. A Typical Marketing Plan sets out A) The Market • The size and growth rate • Its distribution by Region and Competitive brand • Sales by Population strata • Sales by category of Consumer
- 65. B) The Target Customer Age, Social/ Income class, Education levels, Attitudes towards product and its use Product data/ formulation, efficiency of performance vs. competition Packaging, price,Product superiority vs Competition
- 66. C) Competition Competitive brands and their market share Analysis of competitive advertising in terms of theme, media, expenditure
- 67. D) Marketing Objectives Short and long – term aims of the marketing strategy in terms of : • Period • Target consumer • Distribution Policy • Market Research Plans • Product Development Policy • Budget of all Marketing activity • Two imperatives : Documentation / Periodic review
- 68. Need for SWOT • To ensure the successful implementation of a marketing strategy a firm needs to go through a process of : • Identification of major strengths, weaknesses , opportunities and threats based on analysis of company’s resources, customers , competitors and other aspects of the external company environment
- 69. SWOT • SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. • A strength could be: • your specialist marketing expertise. • a new, innovative product or service • location of your business • quality processes and procedures • any other aspect of your business that adds value to your product or service.
- 70. • A weakness could be: • lack of marketing expertise • undifferentiated products and service (i.e. in relation to your competitors) • location of your business • poor quality goods or services • damaged reputation • Opportunities and threats are external factors.
- 71. • An opportunity could be: • a developing market such as the Internet. • mergers, joint ventures or strategic alliances • moving into new market segments that offer improved profits • a new international market • a market vacated by an ineffective competitor
- 72. • A threat could be: • a new competitor in your home market • price wars with competitors • a competitor has a new, innovative product or service • competitors have superior access to channels of distribution • taxation is introduced on your product or service
- 73. • Simple rules for successful SWOT analysis • Be realistic about the strengths and weaknesses of your organization • Analysis should distinguish between where your organization is today, and where it could be in the future • Be specific. Avoid gray areas. • Always analyze in context to your competition i.e. better then or worse than your competition • Keep your SWOT short and simple. Avoid complexity and over analysis • Remember SWOT is subjective.
- 74. Key uses of SWOT • Build on Strengths • Resolve Weaknesses • Exploit opportunities • Avoid threats • A SWOT is an integral part of any Marketing Plan
- 75. Company Resources To succeed, every company needs some competitive advantage. This arises out of some unique resource or resources it possesses. Breakthrough opportunities come from using these strengths and from avoiding direct competition with firms with similar strengths.
- 76. Discovering Company strengths • Evaluate all functional areas • Evaluate products and Markets • Evaluate Specialized knowledge of Company personnel
- 77. Company resources vs. firm’s successes and failures • An analysis of past successes and failures correlated with the firm’s resources can throw light on reasons for either and lead to framing of realistic and successful future strategies.
- 78. • Financial strength is a major factor to be considered in looking at opportunities. Where initial capital outlay is very high this may prove to be a barrier to a company from taking advantage of an attractive opportunity thrown up by the environment.
- 79. Intimate Customer relations and low – cost quality manufacturing are other resources a company may utilize effectively. Production capability / flexibility / outsourcing are other resources to be considered.
- 80. Marketing Strengths • Reputation and customer awareness of a product • Patent for a product • Good relations with distribution channel partners • Effective use of Information Technology • Promotion and price resources • Thorough understanding of the Marketing Environment