2.1 SBU Planning

Business Unit Strategic Planning
A business can define itself in terms of

three dimensions: customer groups,
customer needs, and technology. The
purpose of identifying the company’s
strategic business units is to develop
separate strategies and assign appropriate
funding.
Dimensions That Define a Business
Customer
groups
Customer
Technology
needs
Product Orientation vs. Market Orientation
Company Product Market
Missouri-Pacific We run a railroad We are a people-

Railroad and-goods mover
Xerox We make copying We improve office

equipment productivity
Standard Oil We sell gasoline We supply energy
Columbia Pictures We make movies We entertain

people
The Business Unit Strategic Planning
Process
The Business Mission
Each business unit needs to define its specific

mission within the broader company mission.
Good mission statements have five major characteristics
 They focus on a limited number of goals

.
 They stress the company’s major policies and
values
 They take a long-term view.
 They are as short, memorable, and meaningful as
possible.
SWOT Analysis
Marketers need to be good at spotting

opportunities. Consider the following
A company may benefit from converging industry trends
and introduce hybrid products or services that are new to the
market.
A company may make a buying process more convenient or
efficient.
A company can customize a product or service.
A company can introduce a new capability.
A company may be able to offer a product at a much lower
price.
STRENGTHS AND WEAKNESSES ANALYSIS
Marketing
1. Company reputation Manufacturing
2. Market share 13. Facilities
3. Customer satisfaction 14. Economies of scale
4. Customer retention 15. Capacity
5. Product quality 16. Able, dedicated workforce
6. Service quality 17. Ability to produce on time
7. Pricing effectiveness 18. Technical manufacturing skill
8. Distribution effectiveness
9. Promotion effectiveness
10. Sales force effectiveness
Organization
19. Visionary, capable leadership
Finance 20. Dedicated employees
11. Cost or availability of capital 21. Entrepreneurial orientation
12. Cash flow 22. Flexible or responsive
13. Financial stability
Goal Formulation
Most business units pursue a mix of objectives,
including profitability, sales growth, market share
improvement, risk containment, innovation, and
reputation.
Criteria of Objective:
Strategic Formulation
Porter’s Generic Strategies
STRATEGIC ALLIANCES
Many strategic alliances take the form of

marketing alliances. These fall into four major
categories
Product
Product or
or Service
Service Alliances
Alliances
Promotional
Promotional Alliances
Alliances
Logistics
Logistics Alliances
Alliances
Pricing
Pricing Collaborations
Collaborations
Program Formulation and Implementation
Mckinsey 7s
Feedback and Control
Once an organization fails to respond to a

changed environment, it becomes increasingly
hard to recapture its lost position.
Acompany might remain efficient yet lose
effectiveness. Peter Drucker pointed out that it is
more important to “do the right thing”—to be
effective—than “to do things right”—to be
efficient. The most successful companies,
however, excel at both.
Southwest Airlines Established in 1967, Southwest Airlines continues to differentiate
itself from other airlines with outstanding customer service. At the core of this service
is the company’s culture, which inspires its more than 58,000 employees to delight
the airline’s passengers. By creating an inclusive and fun culture where every team
member feels responsible for the success of company, Southwest motivates
employees to take pride in their work, which often translates into a superior customer
experience. In fact, Southwest ranks its employees first in importance, followed by
customers and company shareholders. The airline explains its company culture: “We
believe that if we treat our employees right, they will treat our customers right, and in
turn that results in increased business and profits that make everyone happy.” This
supportive environment has helped Southwest create a loyal customer base and
become the nation’s largest domestic air carrier—a ranking it has maintained since
2003
Southwest
Airlines

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Business Unit Strategic Planning

A business can define itself in terms of

Company Product Market

Missouri-Pacific We run a railroad We are a people-

Xerox We make copying We improve office

Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We entertain

Each business unit needs to define its specific

Good mission statements have five major characteristics

 They focus on a limited number of goals

Marketers need to be good at spotting

Many strategic alliances take the form of

Once an organization fails to respond to a

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