Topic 2

Corporate Strategy

Corporate Strategy

• Long term aims and objectives of a company and ways of achieving them by allocation of resources

• The overall plan that integrates the strategies of all the businesses within the corporation. It usually describes the overall mission, the financial and human resource strategies and policies that affect all businesses within the corporation, the organization structure, the management of the interdependencies among businesses, and major initiatives to change ...

Product Champion

• A person who takes an inordinate interest in seeing that a particular process or product is fully developed and marketed

• The role varies from situations calling for little more than stimulating awareness of the item to extreme cases in which the champion tries to force the item past the strongly entrenched internal resistance of company policy or that of objecting parties

Pioneering• Pioneering means being ahead of the competitors

by introducing a new product first. It is the most risky (costly) strategy but one with the potential for the largest gains

• A pioneering company requires a strong research and development (R&D) capability, which is expensive

• A pioneering company needs to be financially secure and requires product champions to push new ideas

• Consider the Sony or Apple companies and their various pioneering developments

• Good market research can offset some risk, but is problematic for novel products.

Pioneering

• New products: • The mini• Sinclair zx spectrum• Walkman• Discman• Ipod• Blackberry

Imitative

• An imitative strategy relies on the designs of other companies in creating its designs

• The imitative company also may base its accompanying product marketing strategy on the strategy of the market leader or pioneer

• Imitative strategies frequently are used in the fashion goods, furniture, entertainment, and food products industries.

Imitative

• Any product released by a competitor: reverse engineering

• I-phone• Clone IBM pc’s• Mp3 players• A Class Mercedez Benz• mini MPV other manufacturers

Hybrid Strategy

• Companies that use a mixture of imitative and innovative strategies in order to maximize profit and sales and results in a quick turn around, and the benefits are there will be less disruption within the company should something go wrong

• That is hybrid strategies are an optimal solution for expanding these sales volumes

Hybrid Strategy

• Innovations that are neither uniquely services nor uniquely goods

• “the exploitation of an idea that combines good(s) and service(s), creating more customer benefits than if the good(s) and service(s) were available separately” (Shankar, Berry, and Dotzel)

• The advantage of hybrid innovations is that, as compared to goods, the number of units that must be sold before the unit price exceeds the total unit cost is decreased, while compared to services overall margins are wider thus creating a larger “sweet spot zone”.

Market Penetration

• These are either proactive moves designed to identify and target changing customer requirements, or reactive moves for market defense triggered by competitive actions

• A move by management to increase its market share held by current products in currently serviced markets.

• Market share may be increased by some combination of 1. attracting users of competitive brands2. persuading current users to increase usage3. attracting nonusers of the product category

Market Development

• The expansion of the total market served by a business, achieved by 1. Entering new segments-by expanding the

geographic base of the business ...2. Conversion of nonusers-by lower prices or

increased (or specially designed) promotion3. Increasing usage by present users-by developing and promoting new uses for the product

4. For example, the videotext market is in the market crystallization phase. It appears to have some market benefits, but those benefits have not been fully developed

Task – Victorinox

• Examine the corporate strategies used:

Traditional Innovative

Task - Nylon

Product Development

• One example of how a company undertakes product development by considering the addition of variations to a product to develop a range of products building on an established brand, for example, ice cream, snack food products, chocolate products (Kit Kat, Mars bars).

Task - Kit Kat

• How many variations can you find on the basic Kit Kat chocolate bar?

Diversification

• Involves a company both in the development of new products and in the selling of those products to new companies

• For example: A company manufacturing three-pin electrical plugs may consider producing them in a range of colours or from materials of different textures and/or material properties

Market Sector

• A broad way of categorizing the kinds of market the company is aiming for• For Example: Non alcoholic beverages ref: World Market of Soft Drinks 2005…

Market Segment

• Markets divided up into smaller segments where the purchasers have similar characteristics and tastes

• Examples of ways in which markets may be segmented are:• Consider income, age, lifestyle, geographical

location, and so on

Market Segment

Robust Design

• Flexible designs that can be adapted to changing technical market requirements

• Robust designs can evolve into product families• An example would be a mobile phone where its

form has evolved over a period of time yet the majority or components have stayed the same.

Example of Robust Design

Product Family

• A group of products having common classification criteria.

• Members normally have many common parts and assemblies

Task

• Find examples of robust design that has evolved into a product family

• http://www.onesixsigma.com/article/applying-design-for-six-sigma

Links• http://www.marketingpower.com• http://www.onesixsigma.com/article/applying-design-for-six-sigma• http://www.businessstudiesonline.co.uk• http://www.packagingtoday.com/intronylon.htm• http://www.accenture.com/NR/rdonlyres/23C157D5-01E2-493A-91C7-02EA290CB15D/0/10Sectors.gif• http://www.market-modelling.co.uk/MMS/MMS_Segment.htm• http://www.kitkat.com/about_kitkat• http://www.snogear.com/coldwavesnoicegloves.htm• http://www2.dupont.com/DuPont_Home/en_US/