Date: 16/10/23

Corporate and division strategic planning:

Marketing plays a critical role in corporate strategic planning within successful companies.
Market oriented strategic planning is the managerial process of developing and maintaining
a viable fit among the organization’s objectives, skills, and resources and its changing market
opportunities. The aim of strategic planning is to shape the company’s businesses and
products so that they yield target profits and growth and keep the company healthy despite
any unexpected threats may arise.
Strategic planning calls for action in three key areas. The first area is managing a company’s
business as an investment portfolio. The second area involves assessing each business
strength by considering the markets growth rate and the company's position and fit in that
market. And the third area is the development of strategy, a game plan for achieving long-
term objectives. The complete strategic planning, implementation, and control cycle. By
preparing statements of mission, policy, strategy, and goals, headquarters establishes the
framework within which the divisions and business units prepare their plans. Some
corporations give their business units a lot of freedom to set their own sales and profit goals
and strategies. Others set goals for their business units but let them develop their own
strategies.
Still others set the goals and participate in developing individual business unit strategies. All
corporate headquarters undertake four planning activities:
1. Defining the corporate mission
2. Establishing strategic business units
3. Assigning resources to each SBU
4. Assessing growth opportunities

1. Defining the Corporate Mission:

An organization exists to accomplish something: to make cars, lend money, provide a night's
lodging, and so on. Its specific mission or purpose is usually clear when the business starts.
Over time the mission may change, to take advantage of new opportunities or respond to new
market conditions. Amazon.com changed its mission from being the world's largest online
bookstore to aspiring to become the world's largest online store. eBay changed its mission
from running online auctions for collectors to running online auctions covering all kinds of
goods.
To define its mission, a company should address Peter Drucker's classic questions: What is
our business? Who is the customer? What is of value to the customer? What will our business
be? What should our business be? These simple-sounding questions are among the most
difficult a company will ever have to answer. Successful companies continuously raise these
questions and answer them thoughtfully and thoroughly. A company must redefine its
mission if that mission has lost credibility or no longer defines an optimal course for growth.
Organizations develop mission statements to share with managers, employees, and (in many
cases) customers. A clear, thoughtful mission statement provides employees with a shared
sense of purpose, direction, and opportunity. The statement guides dispersed geographically
employees to work independently and yet collectively toward realizing the organization's
goals.

2. Establishing strategic business units:

Large companies normally manage quite different businesses, each requiring its own
strategy. General Electric classified its businesses into 49 strategic business units (SBUS).
An SBU has three characteristics:

• It is a single business or collection of related businesses that can be planned

separately from the rest of the company.
• It has its own set of competitors.
• It has a manager who is responsible for strategic planning and profit performance and
who controls most of the factors affecting profit.
The purpose of identifying the company's strategic business units is to develop separate
strategies and assign appropriate funding. Senior management knows that its portfolio of
businesses usually includes a number of "yesterday's has-beens" as well as "tomorrow's
breadwinners." Yet it cannot rely on impressions; it needs analytical tools to classify its
businesses by profit potential.

3. Assigning resources to each SBU:

The purpose of identifying the company's strategic business units is to develop separate
strategies and assign appropriate funding to the entire business portfolio. Senior managers
generally apply analytical tools to classify all of their SBUS according to profit potential. Two
of the best-known business portfolio evaluation models are the Boston Consulting Group
model and the General Electric model.

4. Assessing Growth Opportunities:

Assessing growth opportunities involves planning new businesses, downsizing, or
terminating older businesses. The company's plans for existing businesses allow it to project
total sales and profits. If there is a gap between future desired sales and projected sales,
corporate management will have to develop or acquire new businesses to fill it.
The first option is to identify opportunities to achieve further growth within current businesses
(intensive opportunities). The second is to identify opportunities to build or acquire
businesses that are related to current businesses integrative opportunities). The third is to
identify opportunities to add attractive businesses that are unrelated to current businesses
(diversification opportunities).