Lebanese International University

BMKT300 – Marketing Theory and

Principles
 CHAPTER 2

Company and Marketing Strategy - Partnering

to Build Customer Engagement, Value, and
Relationships
 Planning
Planning refers to the process that
managers use to identify and
select appropriate goals and
courses of action for an
organization.
 Levels of Planning
In LARGE ORGANIZATIONS /HOLDINGS (e.g.,
GE, NESTLE, P&G…) planning usually takes
place at three levels of management:

1) Corporate Level.

2) Business or Division Level.

3) Department or Functional Level.

Within Strategic Management there are Three Different Levels of
Strategy Formulation Which Can be Illustrated in the so Called
Strategy Pyramid
Most people are familiar
with Business Level
Strategy. It is about
How Do We Compete in
a Market ? How Do We
Sustain a Competitive
Advantage over Rivals?
At this level we use
frameworks such as the
Value Chain Analysis
and Porter Five Forces.
 Levels of Planning

GE Holding
 Company-Wide Strategic Planning (At the Corporate Level)

Strategic Planning Definition

• Is the process of developing and maintaining a strategic fit between

the organization’s goals ,capabilities and its changing marketing
opportunities.
• It involves adapting the firm to take advantage of opportunities in its
constantly changing environment for long-run survival and growth.
Company-Wide Strategic Planning (At the Corporate Level)
Example of Strategic Planning: ABC University

• Goals: Being number one university, going International,

following quality standards, campuses in different
locations…
• Capabilities: huge number of students, qualified
instructors, Doctors, campuses availability, different
course schedule…
Company-Wide Strategic Planning (At the Corporate Level)

The Three Steps of Strategic Planning

1 2 3
 Company-Wide Strategic Planning (At the Corporate Level)
Step 1: Defining a Market-Oriented Mission

• A mission statement declares an organization’s purpose,

assignment and the job it is setting out to do.
• A mission statement is a brief job description for the entire
organization
• A mission statement focus on the present. It guides people in
the organization and clarifies the day to day business of the
organization.
• A mission statement is usually a single sentence or a very short
paragraph.
 Company-Wide Strategic Planning (At the Corporate Level)
Step 1: Defining a Market-Oriented Mission

Most mission statements answer these three questions:

- WHY? - The purpose or reason the organization exists.
- WHO? - The customers or community the organization
is trying to serve.
- HOW? – The how explains the basic method or strategy
the organization uses to do business.
Mission Statement of Heifer International

The mission of Heifer

International is to end
hunger and poverty while
caring for the Earth. Heifer
does this by providing
appropriate livestock,
training and related
services to small-scale
farmers and communities
worldwide.
 Company-Wide Strategic Planning (At the Corporate Level)
Step 1: Defining a Market-Oriented Mission
N.B. the “WHO” and “HOW” may be explicit or implicit in mission
statements such as:

+ “Our mission is to provide

a free, world class education
for anyone, anywhere”.

+ “Our mission remains

simple: to design, build,
deliver and support the
finest blue water sailboats,
capable of sailing safely
anywhere in the world, in
comfort and luxury”. Principles of Marketing - LU 16
 Company-Wide Strategic Planning (At the Corporate Level)
Step 1: Defining a Market-Oriented Mission

• A mission statement should be meaningful and specific yet

motivating, focusing on customers and the customer
experience.
• Mission statements should be market-oriented defined in
terms of satisfying basic customer needs.
• Product-oriented mission statements define businesses
myopically in terms of product or technology that will
eventually become outdated
Company-Wide Strategic Planning (At the Corporate Level)

Examples of Mission Statements

 Company-Wide Strategic Planning
Step 2: Setting Company Objectives and Goals

The company (GE Holding) needs to turn its mission

statement (at the corporate level) into detailed
supporting objectives at both the business level
(SBU’s; e.g. GE Motors, GE Lighting) and the
functional level (departments; e.g. Marketing, HR…).
Ch 2 -7 Copyright © 2011 Pearson Education
Step 2: Setting Company Objectives and Goals
Corporate Level Business Level Functional Level

Mission
Statement

Ch 2 -7 Copyright © 2011 Pearson Education

 Company-wide Strategic Planning
Step 3: Designing the Business Portfolio

• The business portfolio is the collection of businesses

(SBUs) that make up the company.
Company-wide Strategic Planning (At the Corporate Level)

Step 3: Designing the Business Portfolio

• The Design of the Business portfolio involves two parts:

Part A. Analyzing the current business portfolio to
determine which businesses should receive more, less, or
no investment.

After determining its present status, the company can then:

Part B. Shaping the future portfolio by developing

strategies for growth and downsizing.
 Companywide Strategic Planning
Step 3: Designing the Business Portfolio

Ch 2 -10 Copyright © 2011 Pearson Education 24

 Designing the Business Portfolio
Step 3: Analyzing the Current Business Portfolio

Part A : Portfolio Analysis

Is a major activity in strategic planning whereby top

management (at Corporate Level) identify and evaluates the

key Strategic Business Units- SBU’s (at Business Level) that

make up the company.

 Step 3: Analyzing the Current Business Portfolio

A Strategic Business Unit (SBU) is a division of the holding

company that competes in a distinct industry; General Electric
(GE) has over 150 divisions, including GE Aircraft Engines, GE
Financial Services, GE Lighting, GE Motors, GE Plastics, and
NBC. Each division has its own set of divisional managers.
In turn, each division has its own set of functions or departments
—e.g., manufacturing, marketing, human resource
management, R&D, and so on. Thus, GE Aircraft has its own
marketing function, as do GE Lighting, GE Motors, and NBC.
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio

Portfolio analysis method evaluates SBUs on two dimensions:

1. The attractiveness of the SBU’s market/industry: Market Growth
Rate.
2. The strength of the SBU’s position in that market/industry: Relative
Market Share.
o Tool: BCG (Boston Consulting Group)-Approach, known as the
Growth-Share Matrix.
o Divides SBUs into 4 groups.
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
Growth-Share Matrix / BCG Matrix

1 3

2 4
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
Growth-Share Matrix / BCG Matrix

1. Stars:
• Operate in high growth markets and maintain a high market shares
businesses.
• They are both cash generators and cash users.
• Eventually, they will turn into cash cows.
• Company should invest in them to finance and support their rapid
growth.
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
Growth-Share Matrix / BCG Matrix

2. Cash Cows:
• Operate in low growth markets and maintain high market shares
businesses.
• Most profitable.
• Should be milked to get as much cash as possible from them.
• The company uses this cash to pay its bills and support other SBUs
that need investment.
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
Growth-Share Matrix / BCG Matrix

3. Question Marks:
• Question marks are low-share business units in high-growth
markets.
• Require a lot of cash to hold their share.
• The company is investing in them but they are not producing
a lot of cash.
• Require close consideration to take a decision on whether to
try to build them into stars or phase/drop them out.
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
Growth-Share Matrix / BCG Matrix

4. Dogs:
• Dogs are low-growth, low-share businesses and products.
• They may generate enough cash to maintain themselves but do not
promise to be large sources of cash.
• Don’t promise to be large sources of cash.
Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
 Designing the Business Portfolio
Analyzing the Current Business Portfolio
Example: Mc Donald’s BCG Matrix (AT BUSINESS LEVEL)
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
Example: Mc Donald’s BCG Matrix

• Star of Mc Donald’s is the Big Mac. The company keep investing in

it (spending cash on it) to market it more to its customers, and at the
same time, it sells a lot and generates a lot of cash for the company.
• Cash Cows are the French Fries and Soft Drinks that are already
established and the customers always order them even if the company
doesn’t advertise about them or make improvements in them. All
customers orders fries and drink with there meals, so they generate a
lot of cash for the company.
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
Example: Mc Donald’s BCG Matrix

• Question Mark is the Mc Flurry in which the company is investing

in to boost its sale (for example: different flavors) but still, they are
not highly ordered by the customers maybe because they consider Mc
Donald’s as being a fast food restaurant for burgers and sandwiches
and not for dessert; also this product sells only during summer (ice
cream) so it doesn’t generate a lot of money to the company all year
long.
• Dogs are the Onion Rings in which the company is not investing in
because they are more focused on burgers. This product is ordered by
a small number of customers, generating enough cash to hold itself.
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
Example: Apple’s BCG Matrix (AT BUSINESS LEVEL)

Apple has six

product lines:
1- iPad
2- Apple Computer
3- iPhone
4- iWatch
5- Apple TV
6- iPods
 Designing the Business Portfolio
Step 3 -Part A. Analyzing the Current Business Portfolio
Growth-Share Matrix / BCG Matrix

• Now, the company must determine what role each SBU will play in
the future, by pursuing one of the four following strategies:
o Build by investing more.
o Hold by investing just enough.

o Harvest by milking short-term cash regardless long-term effect.

o Divest by selling or phasing out and using the resources elsewhere.
• As time passes, SBUs change their position in the matrix.