Comperhensive Scheme

Stage One ?Where Are We Now Strategic and Marketing Analysis

Marketing Auditing & SWOT Analysis

,Segmental Productivity & Ratio Analysis

Approaches to Competitor Analysis

Approaches to Customer Analysis

1- Introduction & Company profile:  Type of business  Geographic domain  Culture of senior management  Competitive situation 2- Marketing Audit:  Macro environment (PEST) use external papers  Task environment Use Porter 5 forces:  Threats of new entrants Potential  Rivalry among existing firms Entrants  Threats of substitutes  Bargaining power of Buyers  Bargaining power of suppliers Threat of Relative power New Entrance of Unions, Governments, Industry .etc Competitors Other Stakeholders Buyers Suppliers Bargaining power of Suppliers

Rivalry among existing Firms

Bargaining power of Buyers

Threat of substitute product or service Substitutes

1

Rivalry among existing firms? Criteria Number of firms, few equally balanced giants Industry growth rate Very high or fixed storage cost Commoditization, low differentiation Capacity, intermitent overcapacity Diversity of rivarly High strategic/corporate stakes High exit barriers Total % The bargaining power of buyers, how strong? Criteria A single or very few buyers purchase a high proportion of total sale Product volume purchased Products are standard or undifferentiated Low switching costs Buyer is in low profit business = sensitive to cost Real threat of backward integration from buyer Industry product not important for buyer quality The buyer has full information on product Total % The bargaining power of suppliers, how strong? Criteria Dominated by few companies, more concentrated than the target industry The target industry is NOT important to the supplier Supplier product is unique, or high switching cost Supplier product is critical for the business of the target Substitutes are not easily available Real threat of forward integration from supplier Total % Threat of new entrants – barriers to entry how high Criteria Powerful economies of scale Strong customer loyalty by product differentiation Large capital investment requirements Switching cost for new products are high Lack of access to distribution channels Structural cost disadvantage

Score 4 1 3 1 5 5 4 3 26 55%

Score 1 3 4 4 4 3 1 4 24 60%

Score 4 2 5 4 4 4 23 77%

Score 4 1 2 4 3 1

2

Government policy Total %

4 19 54%

Substitutes: Criteria Relative perceived value tending to improve Where the threat is to another industry's cash cow Total %

Score 2 4 6 60%

Relative Power of Other Stakeholders

   

/Social Cultura l

Marketing strategy audit (Mission – objectives – strategy) Marketing organization audit (Functional – efficiency) Marketing productivity audit (profitability – cost effectiveness) Marketing functions audit ( 4 Ps) Econo /mic Demog .

Politica /l Legal

Macro Environment Techno .

Market s

Marketi ng Environm ent

Compe titors

Task Environment

Dealer s

Suppli ers

PR Agenci es

Ecolog ical

Market Audit

Produc ts

Marketi ng Functio ns

Price

Sales Force

Promo Distrib ution

3

External Factor Analysis Summary EFAS External Factors Threats Emergence of substitutes products Government regulations

Weight

Rating

Weighted Score

0.1

4

0.4

Due to the global expansion

0.25

5

1.25

May interfere in company’s policies

0.35

4

1.4

Will increase the companies growth and reduce risk

0.25

5

1.25

Like sport field

0.05

2

0.1

Will reduce risk and increases profit

Comments

Opportunities Expanding globally Entering new market segments Capitalize on leading position in the market

Internal Environment A: Corporate structure B: Corporate Culture C: Corporate Resources 1. Marketing 2. Finance 3. R&D 4. Operations 5. Human Resources 6. Information Systems Internal Factor Analysis Summary IFAS External Factors Weaknesses Decline in film industry Decline in theme park attendance Financial performance Strengths Copyright protection Products diversification Information system Strong brand name and reputation Human resource management

Total Scores

Weight

Rating

Weighted Score

0.1

4

0.4

Needs to be developed

0.05 0.15

2 4

0.1 0.6

Needs more marketing efforts May lead to great losses

0.2 0.2 0.1

4 4 4

0.8 0.8 0.4

Strong Competitive advantage More attractive Strong communications

0.1 0.1

4 5

0.4 0.5

High Loyalty Successful services

4

Above Average

1

Comments

Segmental Analysis: Ratio Analysis (Profitability – Liquidity – Leverage – activity) 3- Competitor analysis: In relation to macroeconomic factors (focus on competitor's strengths which are your weaknesses)

4

4- Customer analysis: Relate to the objectives

3-SWOT analysis:  Opportunities  Threats  Table of strengths & weakness analysis Strengths & Weaknesses

Performance Fundamenta l strength

Marginal strength

Neutral

Importance Marginal weakness

Fundamental weakness

High

Medium

Marketing Factors Financial Factors Manufacturing Factors Organizational Factors

 TOWS Matrix Internal External

Organizational Organizational strengths weaknesses Strategic options

Environmental opportunities (and risks)

SO: Strengths can be used to capitalize or build upon existing or emerging opportunities

Environmental threats

ST : Strengths in the organization can be used to minimize existing or emerging threats

WO : The strategies developed need to overcome organizational weaknesses if existing or emerging opportunities are to be exploited WT : The strategies pursued must minimize or overcome weaknesses and as far as possible cope with threats

5

Low

Stage Two ?Where Do We Want To Be Strategic Direction and Strategy formulation

Market ,Segmentation Targeting and Positioning

Missions and Objectives

Vision

Goals

The Formulation of Strategy

Mission Market segment scope-1 Industry scope-2 Technology scope-3 Vertical scope-4 Geographical scope-5

Objectives How to achieve

)sub-goals(

Strategies 2- Market segmentation: Targeting positioning (perceptual map – value positioning – value disciplines) A- Value Positioning:  More for More.  More for the Same.  The Same for Less.  Less for Much Less.  More for Less B- VALUE DISCIPLINES OPERATIONAL EXCELLENCE

PRODUCT LEADERSHIP

CUSTOMER INTIMANCY

Core Business Processes that….

Sharpen distribution systems and provide no hassle service

Nurture ideas, translate them into products, and market them skillfully

Provide solutions and help customers run their businesses

Structure that….

Has strong, central authority and a finite level of empowerment

Acts in an ad hoc, organic, Loosely knit, and ever-changing way

Pushes empowerment close to customer contact

Management System that….

Maintain standard operating procedures

Reward individuals’ innovative capacity and new product success

Culture that…

Acts predictably and believes “one size fits all”

Experiments and thinks “out-of-the-box”

Measure the cost of providing service and of maintaining customer loyalty Is flexible and thinks “have it your way”

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C- Specific positioning: • Best quality • Best performance • Most reliable • Most durable • Safest • Fastest • Best value for the money • Least expensive • Most prestigious • Best designed or styled • Easiest to use • Most convenient 3- Strategic formulation: A- Business Strategy using Porter's Generic Strategies: Type of strategies

Ways to achieve the strategy

Cost Leadership

Size and economies of scale Globalization The ability to: Relocating to low-cost parts of the world outperform rivals Modification/simplification of designs erect barriers to entry Greater labour effectiveness resist the five forces Greater operating effectiveness Strategic alliances New source of supply

Vulnerability to even lower cost operators Possible price wars The difficulty of sustaining it in the long term

Focus

Concentration upon on or a small number A more detailed of a strong and specialist reputation understanding of particular segments The creation of barriers to entry A reputation for specialization The ability to concentrate efforts The creation of strong brand identities A distancing from others in The consistent pursuit of pursuit of those the market factors which customers perceive to be The creation of a major important competitive advantage High performance in one or more of a Flexibility spectrum of activities

Limited opportunities for sector growth The possibility of outgrowing the market The decline of the sector A reputation for specialization which ultimately inhibits growth and development into other sectors

Differentiation

Benefits

Possible problems

The difficulties of sustaining the bases for differentiation Possibly higher costs The difficulty of achieving true and meaningful differentiation

Corporate strategies: Directional strategies: 1- Growth Strategy It is the most appropriate strategy designed to achieve higher sales, assets, profits or combination of all. Continuing to grow is increased sales, improve the per unit cost and a better experience curve with an increased profit and market share. (If the company is intending to share the market, the company must peruse growth strategy) Either growth is internally through expanding of operations both globally and domestically or it can grow externally through mergers, acquisitions and strategic alliance. The company is already applying a vertical growth through vertical integration with some of its distributors outside and suppliers. It must increase both backward and forward integration to include or to add additional suppliers for more material that is 7

input to COMPANY X' products and to reduce the power of the suppliers over its business, also to include more distribution channels either owned, or agents to ensure the distribution of COMPANY X's product all over the world and to achieve its objective of increasing its exports to 50% by the year 2010 but without affecting the local market.. Horizontal growth is also an applied strategy in expanding COMPANY X's products in range and in other geographical locations and/or increasing the range of products in the same location. The first step of acquisition of AMC is a very good example and start for horizontal integration where COMPANY X would enriches its range of products with a unique and additional product and applying its cost leadership strategy to the new product will result in a very good market position, also there are many other options for growth strategy. 2- Stability strategy: if the company is operating in reasonably stable environment, stability strategy will be very appropriate for successful operation)  Profit  No change  3- Retrenchment strategy: when the company is in a weak competitive position, some or all of its products results in a poor performance, sales are down and profits are becoming losses. Therefore using retrenchment strategy to eliminate the weakness that are dragging the company down)  Turn around  Bankruptcy  Divestment  THE RELATIONSHIP BETWEEN INDUSTRY STRUCTURE Consolidated or fragmented industry

B- Ansowf's Matrix:

AND

COMPETITIVE STRATEGY -

(Company's growth path to build Demand)

8

Existing

Markets Modified

New

Existing Sell more of our existing products to our existing types of customers. (Market penetration) Enter and sell our products in other geographical areas. (Geographical expansion) Sell our existing products to new types of customers. (Segment invasion)

Products Modified Modify our current products and sell more of them to our existing customers. (Product modification) Offer and sell modified products to new geographical markets. Offer and sell modified products to new types of customers.

New Design new products that will appeal to our existing customers. (New product development) Design new products for prospects in new geographic areas. Design new products to sell to new types of customers. (Diversification)

Other 2 options regarding Ansowf's: 1. Innovating new delivery system (Email, Telephone, ….) 2. Invading new market spaces (alliances, joint ventures) C- Military Strategies: PRINCIPLES OF DEFENSIVE MARKETING WARFARE 1. Only the market leader should consider playing defense. 2. The best defensive strategy is the courage to attack. 3. Strong competitive moves should always be blocked. PRINCIPLES OF OFFENSIVE MARKETING WARFARE 1. The main consideration is the strength of the leader’s position 2. Find weakness in the leader’s strength and attack at that point. 3. Launch the attack on as narrow a front as possible.

A) B) C) D) E) F)

1- Defensive strategies: For market leader Position defense: of the current market (weakest way) Mobile defense: market broadening, diversification into unrelated industries. Flanking defense: Don't ignore secondary markets Contraction defense: withdraw from segments&/or geographical regions which are most vulnerable Pre-emptive defense: Striking first by first gathering information about the competitors and capitalizing on competitive advantage Counter offensive attack: response after the attack by:  Attack head on  Attacker's flank  Pincer movement

2- Offensive strategies: For market challenger A) Frontal attacks: matching competitors in everything, (should have superior resources & willing to persevere. B) Flank attack: attack part of the market where the competitor is weak 9

C) Bypass attack: offer new type of product that makes the competitors product unnecessary D) Encirclement: Encircles the competitor's position in terms of products or markets or both. E) Guerrilla warfare: "Hit & Run", small intermittent assaults on different market segments (think of exit strategies)

Stage Three ?How Might We Get There Strategic Choice

Product and Service Strategies

Pricing Policies and Strategies

The Promotional Plan

The Distribution Plan

A- Promotion: Advertising

Sales Promotion

Public Relations

Sales Force

Direct Marketing

Print and broadcast ads Packagingouter Packaging inserts Motion pictures Brochures and booklets Posters and leaflets Directories

Contests, games, sweep Stakes, lotteries Premiums and gifts Sampling

Press kits

Sales presentatio ns Sales meetings Incentive programs Samples

Catalogs

Reprints of ads Billboards Display signs Point-ofpurchase Displays Audio-visual material Symbols and logos Videotapes

Fairs and trade shows Exhibits Demonstratio ns Coupons Rebates Low-interest financing Entertainmen t Trade-inallowances Continuity programs Tie-ins

Speeches Seminars Annual reports Charitable donations Sponsorships

Fairs and trade shows

Mailings Telemarketin g Electronic shopping TV shopping Fax mail

Publications

E-mail

Community relations Lobbying

Voice

Identity media Company magazine Events

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B- Product & Service Strategy: Using the Consumption Chain to Find New Opportunities (For B2C) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

How do people become aware of their need for your products or service? How do consumers find your offering? How do consumers make their final selections? How do consumers order and purchase your product or service? How is your product or service delivered? What happens when your product or service is delivered? How is your product installed? How is your product or service paid for? How is your product stored? How is your product moved around? What is the customer really using your product for? What do customers need help with when they use your product? What about returns or exchanges? How is your product repaired or serviced? What happens when your product is disposed of or no longer used?

Faith Popcorn’s Ten Lifestyle Trends 1. Cashing out. Slower but more rewarding pace. 2. Cocooning. Impulse to get inside when the outside gets scary. 3. Down-aging. Tendency to feel younger than one’s age. 4. Egonomics. Treated differently from others. 5. Fantasy adventure. Meets people needs to offset their daily routine. 6. 99 Lives. Juggle many roles and responsibilities. 7. S.O.S. Make society more socially responsible along the three critical Es: Environment, Education, Ethics. 8. Small indulgences. Stressed out consumers need occasional emotional fixes. 9. Staying alive. People’s drive to live longer and better lives. 10. The vigilante consumer

11

Consumer activity cycle (for B2B) Expand renew

Consultation Update Pre

Review plan

Take strategic decision

Review

Understand IT options

Maintain

CAC

Planned Maintenance

During

Repair Post

Review replace renovate

Train Training & getting people online globally

Feasibility IT Advice

Develop system integration System & SW integration Purchase Sourcing distributing

Install & Setup Pilot install & remove old machine

C- Distribution & Place: Channel Decisions: • Channels Coverage • Assortments • Locations • Inventory • Transport Channel design decisions: • Push strategy • Pull strategy Establish Objectives and Constraints Identify Major Channel Alternatives o Types of Intermediaries o Number of Intermediaries • Exclusive distribution – Exclusive dealing • Selective distribution • Intensive distribution

12

D- Price: Value pricing usingConjoint Analysis     

Popular marketing research technique. Determine features and pricing. Less expensive than concept testing. Easy to understand; Difficult to master. Apply to service product development and pricing.

COMPANY X STRUCTURE The organization is the process of arranging people and other resources to work together to accomplish a goal and as a result of the company strategy the organization structure must be adjusted to cope with the new strategy and achieve its goals. The organization's strategy to grow and go more international must be reflected on the organization structure to achieve the required result.

Simple structure: Owner-manager makes decisions. Little specialization of tasks. Few rules, little formalization. Advantages:

Provides high flexibility Rapid product introduction Few coordination problems

Functional structure: The company rather being lead by an entrepreneur, he is replaced by as team of managers who have functional specializations. The entrepreneur must learn now to delegate his responsibilities; otherwise, the new structure will yield no benefit Advantages • Centralized control of operations • Promotes in-depth functional expertise • Enhances operating efficiency where tasks are routine Disadvantages • • • • •

Functional coordination problems Inter-functional rivalry Overspecialization and narrow viewpoints Hinders development of cross-functional experience Slower to respond in turbulent environments

13

President Accounting

HR

Legal affairs

Finance

Marketing

R&D

Production

Divisional structure: It occurs especially when the organization is managing diverse product line or when the organization is expanding to cover wider geographical areas Advantages: • Decentralized decision making • Each business is organized around products • Puts profit/loss accountability on manager • Facilitates rapid response to environmental changes • Allows efficient management of a large number of units Disadvantages • May lead to costly duplication of functions • Inter-divisional rivalry • Corporate managers may lose in-depth understanding

President

Product division A

Marketing

Finance

HR

Product division B

Finance

Manufacturing Manufacturing

HR

Marketing

14

Matrix Structure The matrix structure (some times called the matrix organization) it combines the functional and divisional structure. It is designed to gain the advantage and minimize the disadvantages of the functional and divisional structures. The matrix is formed by using permanent cross functional teams to integrate functional expertise in support of a clear divisional focus on project, product or program. The matrix structure in the multinational organizations offers a flexibility to deal with the regional differences as well as the multi products, programs or regional needs. The matrix structure is the common solution for the organizations that pursues the growth strategies in a dynamic and complex environment • •

Functional & product form are combined simultaneously at the same level. Employee have 2 superior, functional superior & horizontal product manager

When to use ? • Scarce resources • Ideas need to be cross fertilized across projects • External environment is very complex and changeable 3 Distinct phase exist in the development of matrix structure 1 -Temporary cross functional task forces: Project manager is in charge as the key horizontal link 2 -Product or brand management: The functional is still the primary organizational structure, product manager act as integrator of semi permanent product or brand 3-Mature matrix: A true dual authority structure, functional & product structure are permanent

General Manager

(Assistant)

Project

Manufacturing

Engineering

Sales

Marketing Manager Manager

Manager

Manager

Manager

xxxx

xxxx

xxxx

Project A xxxx

15

Project B xxxx

xxxx

xxxx

xxxx

Project C xxxx

xxxx

xxxx

xxxx

Network structure • many activities are outsource • series of independent firms or business units that are linked together by computers in an IS • Used when the environment is unstable Nike , Reebok , Benetton use the network structure on there operation functions by subcontracting manufacturing to other companies in low cost location around the world . Advantages: • • • •

Rapid response time Firm’s emphasize their own core competencies Very flexible Reduces capital intensity

Leadership Style The founder (SA) at this point is following a telling leadership style, which is characterized by giving a specific task directions and closely supervising tasks. At this point of time and according to the current circumstances the leadership style must be adapted to match the near future circumstances. According to behavioral approach, there are four styles: 1. Laissez-faire shows low concern for both people and task. Turn most decisions over the work group and show less interest in the work process or its results. 2. Directive or Autocratic, High concern for task and low concern for people. Make most of the decisions, gives directions and expect his orders to be followed. 3. Supportive or human relations leader shows high concern for people and low concern for tasks. Warm in interpersonal relationships, avoid conflict, and seek harmony in decision-making. 4. Participative or democratic, shows high concern for both people and task. Share decisions with the work group, encourage participation and support the work efforts of others.

COMPANY X CULTURE:

"THE COMPANY WAY"

It is the collection of beliefs, expectations and values learned, shared by a corporation's members, and transferred from one generation of employees to another.

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It might be changing or elaborating but hardly completely fades away. It gives the corporation its identity.

REGARDING HUMAN RESOURCE MANAGEMENT Human resource management is one of the most important key success factors in organization, which is not totally implemented in Egypt, and its improvement will greatly improve the organization performance 1. Human Resource Objectives The human resource objective reflects the intention of the senior management (strategy) with a balance to the related topics such as HR functions, society, governing rules, etc. There are four major objectives for the Human resource management; 1. Organizational objectives: to achieve the required organization effectiveness and objectives and ensure that the organization always has people with the right abilities available to do the right work 2. Functional Objectives: maintain the department’s contribution at a level appropriate to the org. needs 3. Societal Objective : respond ethically and socially to the challenges of the environment while minimizing the negative impact of such demands on the organizations 4. Personal objectives: to assist retain and motivate the employees for achieving their personal goals and guide them to better achievement (most important ) 2- Human Resource Strategy: The human resource Strategy addresses the issue of whether to recruit a low skill, low paid, high turnover employees or higher a high skill, high paid, low turnover employees. The organization policy to go international must be a highly paid high skill, low turn over employees to improve creativity of the employees and the turnover must be kept at its minimum levels. 3-Human Resource Policies and Programs -

-

Preparation and selection: Review of the employees' job description, job specification and job performance standard to match the change of the organization. Succession Planning: the preparation of the company succession plan will enable the organization to stand any future challenges.

17

Career Path and development: the preparation of the career path for the employees will help the stability and minimize the turnover of the employees. - Recruitment: designing a good recruitment process (Selection, interviews) with a high level of orientation to ensure the compatibility of the new recruited employees with the existing culture to achieve organizational objectives. - Training and development: on-the- job” training, Off-the-Job training and Provide career planning assistance for employees. - Incentive system will ensure the motivation of the employees to better performance (linking incentive to production) - Compensation Policies and protection: What employees get in exchange for their contribution to the organization”,  maintain, retain productive workforce, achieve the org. objectives - Testing: Will ensure the qualification of the candidates and their fit in the organization culture. - Managing workforce diversity( if the organization is going internationally) - Enhance employee participation: in implementing our strategy, all employees from different organizational levels must make a meaningful contribution in decision-making .this will increase employee's involvement and enhance their working life balance. - Enhance employee organizational commitment: by increasing job involvement, which results in lower levels of absenteeism and turnover. - Implementing employee recognition programs: starting with personal attention and ending with appreciation for a job well done. - Develop effective staffing plans supporting the organizational strategies by allowing to fill job openings proactively (in terms of number and the quality of the workforce for the short and long term) VIP in case of international operations.( if the company is multinational) -

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Stage Four ?Which Way Is Best Strategic Evaluation

Criteria of Choice

Modeling Approaches

GE Evaluation Criteria

• Alternative strategies should be evaluated based on their impact on the following: 1. Financial Results 2. Market Position 3. Productivity 4. Product leadership 5. Employee Attitude 6. Personnel Development 7. Community Impact 8. S/T vs L/T

19

GE Evaluation Criteria Total 100

Choices are from stage 3

Weights are given Weights according to objectives (stage 2) 1. Financial Results 35 Total 100 2. Market Position 3. Productivity

20

Strategic choice No. 1

Strategic choice No. 2

Strategic choice No. 3

40 (40x35)/100 =(14) 40 (40x20)/100 =(8)

40 (40x35)/100 = (14) 20 (20x20)/100 = (4) 40 (40x5)/100 = (2) 40 (40x15)/100 = (6) 20 (20x5)/100 = (1)

20 (20x35)/100 = (7) 40 (40x20)/100 = (8) 30 (30x5)/100 = (1.5) 35 (35x15)/100 = (5.25) 40 (40x5)/100 = (2)

5

30 (30x5)/100 =(1.5)

4. Product leadership

15

5. Employee Attitude

5

25 (25x15)/100 = (3.75) 40 (40x5)/100 = (2)

6. Personnel Development 7. Community Impact

0

8. S/T vs L/T

10 10 100

50 (50x10)/100 = (5)

40 (40x10)/100 = (4) 25 20 (25x10)/100 = (20x10)/100 = (2.5) (2) =14+8+1.5+3.75+ =14+4+2+6+1 2+5+2.5=34.75

+4+2= 33

10 (10x10)/100 = (1) 55 (55x10)/100 = (5.5) =7+8+1.5+5.25 +2+1+5.5 =30.25

N.B.: Financial results should not take more than 40% weight. Add the results of each choice & the one with the greatest score should be chosen

20

Stage Five

?How to Ensure Arrival Balanced score card: From stage 3

From stage 2

Objectives

Measure

Target

Strategies

Financial

Broaden the revenue mix

Revenue Mix

Customer

Increase customer satisfaction Develop new products

Customer retention

10% A 40% B 50% C 95%

Sales promo New marketing channels Frequent Buyers club

2003 2004

R&D Customer surveys Customer training Knowledge library

Internal Business Processes Learning & Growth

Develop new skills

% revenue from new products Cross trained

90%

15% 50%

21