Omar Arturo Salcido Moreno

A01114221

Summary Chapter 2

The chapter two of this book talks about strategic planning. Strategic
planning is to set company goals depending on the market opportunities and the
company resources, it addresses two questions: What is organization’s main
activities at a time? And How will it reach its goals? Next to it, the author talks
about one kind of strategic planning, SBUs (Strategic business Units), A SBUs
operates as a separate unit, but it is also an important part of the company. It
reports to the headquarters about its operational status. A good example can be
Colgate which is an SBU of P&G. The next kind of strategic planning showed is
Ansoff’s strategic opportunity Matrix which consists of matching products with
markets with four options: market development, market penetration, product
development and diversification. In contrast, because many critics of the last
strategic does not reflect the reality of how business grow, the innovation matrix
can be used. This strategy is divided in three levels: Core innovation, adjacent
innovation and transformational innovation. Another way of strategic planning there
is the one used by the Boston consulting group, the portfolio matrix which is a tool
for allocating the resources of a SBUs based on the market share. It’s divided in
four categories: The star (the business unit that generates large profits but needs
lots of cash), the cash cow (Generates more cash than it needs to maintain its
market share), the problem children (It shows rapid growth but poor profit margins)
and the dog (it has low growth potential and a small market share. The last
strategic planning shown in this chapter it’s the general electric model and its
dimensions (market attractiveness and company strength are richer and more
complex than the Boston consulting group one. Finally, based on the company
strategy, it’s necessary a written document that acts as a guidebook of marketing
activities for the marketing manager.

The section 2-4 is about the mission statement which answers the question
What business are we in? so it focusses on the market they attempt to serve rather
than on the good offered. The authors say that companies that focus on their good
and services, they have marketing myopia, so it affects their business and
Omar Arturo Salcido Moreno
A01114221

environment directly. Also, the author says is that a company had to do a SWOT
necessarily to examine its strengths, weaknesses, opportunities and threats, and
with that it could identify its competitive advantage which means that the unique
features and products that are perceived by the target market as superior to those
of the competition.

There are 3 types of competitive advantage, cost, product differentiation, and

niche:

Cost competitive advantage: Being the low-cost competitor in an industry

Product differentiation competitive advantage: Having something unique and

valuable beyond offering something with a lower price

Niche competitive advantage: To effectively serve a small segment of the market

Finally, it is necessary to set some marketing plan objectives to achieve all the
company goals and to get higher profits.