Marketing Managment - Essay Example

? Business Strategy Analysis & Discussion One of the most important elements of corporate world and corporate success is the development of business strategy. The word strategy has a broad meaning and has been used at different places with different references. In a broad sense “a strategy is a plan for pursuing a mission and achieving objectives.” (Lussier 2009) The planning in any organization is broken up into three planning levels: corporate, business and functional. The corporate and business strategy comes under strategic planning and the functional strategy is the domain of operational planning. “A business strategy is the plans, choices and decisions used to guide a company to greater profitability and success.” (Kourdi 2003) The firm’s main objective behind formulating a business strategy is to constantly provide their customers with goods and services that have performance characteristics different or better from the competitors. A successful business strategy is important for the going concern of the firm. The firm should improve upon its net wroth as it grows because these days the race is not of survival but of success. The planning hierarchy for any organization depends upon its product range. The firms, large or small, having a single product line will have a business strategy. However, any firm that has a wide variety of product has a business strategy for each type of product and an overall corporate strategy for the entire firm. Thus a business strategy is the individualized version of corporate strategy. The more the products lines the more business strategies would be formulated, one for each product. These multiple business strategy would be integrated by a single corporate strategy. The corporate strategic planning is an integrated process with every step being linked to the other. The first step of the strategic planning process is the mission statement. A mission statement identifies current and future business of a firm. It explains the vision of the firm, i.e. exhibits the direction in which the firm is headed. A good mission statements show cases the expectations of where the firm will be in the future. Its power motivates people to achieve what is planned. It gives a clear and concise framework of what the firm should do now and what should be its future endeavours. This step of strategic planning process involves strategic thinking i.e. what the firm needs to do ten to fifteen years from now. The mission is followed by analysis, which involves environmental scan this analysis is important because a business strategy should be congruent with the capabilities of the firm and its external environment. This scan involves industry and competitive analysis, company analysis and identification of competitive strategy. For analysing the industry environment porter’s five forces model is used. The rivalry among firms identifies the extent of competiveness, strength of barriers to entry, buyer power, supplier power and the threat of substitute all are analysed and listed as a part of the industry analysis. In the company analysis the present strategy is assessed based on the performance indicator and financial analysis. A SWOT analysis is conducted identifying the strength, weaknesses, opportunities and threats for the firm. Also PEST analysis, involving the political, environmental, social and technological changes affecting the firm, is also conducted. Lastly identifying competitive advantage involves core competency and benchmarking. Core competence is what a firm does best and benchmarking is comparing ones products and services with that of the customer in order to add any improvement to the existing product and services. After the situation analysis is the step of goals and objectives. The goal setting and objectives formation is a crucial part of the strategic process. Goals are broad target of what is to be achieved which are then translated in to more measurable, workable, achievable and specific targets know as objectives. After this step comes the grand strategy or the corporate strategy formation. The corporate strategy can be the growth strategy, stability strategy, turn around and retrenchment strategy or combination strategy. “The four dimensions define a business strategy: the product market investment strategy, the customer value proposition, the assets and competencies, and the functional strategies and programmes.” (McLoglhin & Aaker 2010) The first of these dimensions state where to compete and the rest state how to do that. The firms invest in being low cost or putting their resources to a specified use in the first dimension. “For the customer value proposition the first step is to research the customer.” (Kotler et al 2009) The research is done to align what the firm is providing to what is desired by the customer. Then comes aligning the assets with the strategy and evaluating their strengths and weaknesses. Finally the crux is developing the functional strategy and putting all things to perspective. Let us analyse all the above description in terms of the Volkswagen group. The mission for Volkswagen stated on their official website is: Our aim is to make Volkswagen group the leading automaker by 2018 – economically and ecologically. PERCEPTUAL MAP Brand -High GM Chrysler Ford Toyota Honda Perceived Quality- Low High Low Studying the industry through porter’s five forces model gives a good picture of the automotive industry. The rivalry among firms in this industry is high due to the great diversity of rivals culture, slow market growth, high fixed costs and low switching costs for the customer. The threat of substitute to this industry is low because all other transportation vehicles don’t offer the same utility, convenience and independence. The industry has high barriers to entry due to high capital requirements and the specialized nature of the industry. The power of supplier is less as compared to that of the buyer. The buyer of the automotive industry is very high. The fact is that few firms hold large stakes and the automotive parts are standardized commodities. However this industry is very dynamic and the forces intensify its ever changing nature. Talking about the company, the Volkswagen group was formed in 1937 in Germany with the word literally meaning people’s car. It is the largest European car manufacture today. Its strength is its appeal as a people’s car and the weaknesses is the decline results due to decreasing market share. The company faces threats from the competitors who are gaining market share but has an opportunity of coming up with newer and novel model like the hands free driving. The goal for Volkswagen is to bring diversity and new models to their product line. The objective is to introduce newer models like the hands free driving and bring technological advancement in their product line. The corporate strategy for this company is a combination of growth and stability. The company plans to use concentration strategy and bring new models to the same customers. Also in order to grow they will maintain their sales and grow slowly out of their declining profits. The product marketing strategy for VW is affordable price car for everyone so as to increase it market share from the existing one. The company has carried out focus group researches to identify the needs of customers and develop a price that adds value to the customer purchase as a part of VW’s value proposition. The company has upgraded its plants in China as well as in Europe thus enhancing the strengths of its assets. As a part of its functional strategy the firm has made acquisitions in order to improve its market share. Thus with careful planning and product innovations the company is all set to become the largest market leader by 2018. References Aaker, D. & McLoglhin, D. (2010) Strategic Marketing Management – Global Perspectives. West Sussex: John Wiley & Sons Ltd. p.9. Kotler, P. et al (2009) Marketing Management – A South Asian Perspective, 13th ed. New Delhi: Dorling Kindersley, p.118. Kourdi, J. (2003) Business Strategy: A guide to Taking Your Business Forward, 2nd ed. London: Profile Books Limited, p.7. Lussier, R. (2009) Management Fundamental; Concepts, Applications & Skill Development, 4th ed. Mason: South Western Cengage Learning, p.135. Volkswagen (2010) Publications, [online] Available at: http://www.volkswagenag.com/vwag/vwcorp/info_center/en/publications/2011/03/Volkswagen_AG_Geschaeftsbericht_2010.-bin.acq/qual-BinaryStorageItem.Single.File/GB_2010_e.pdf [Accessed: 18th March 2011]. Read More