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Chapter Six
Market Strategy

McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
CRITICAL ELEMENTS IN A STRATEGIC PLAN

Determining the (What markets do we

1 product market serve with what
to serve products)

Determining the (What level of

2
level of commitment investment in the
to provide resources product market are
we willing to make)

Determining the (What are the

3 objectives and plans detailed aims and
for each functional action plans)
area

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 STRATEGY PROCESS
Update
MODEL
historical data

Collect current
situation data

Data analysis

Develop objectives,
strategies programs

Develop financial
documents

Negotiate final plan

Measure progress
toward objectives

Audit 6-4
 1. Define 2. Develop 3. Define 4. Define Strategic
Track 1 mission statement of vision goals planning
operating foundation
principles and
values

Environmental scanning Strategy development

5. Define planning 6. Define 7. Define 8. Select Business
Track 2 assumptions & total leadership segments strategy
implications: market & requirements, and define
Develop consensus most assess long-term corporate
re: environment attractive strengths & & segment
(customer/market, segments weaknesses in strategy
competition, attractive
suppliers, etc.) segments

Gap analysis Strategy integration and capability development

9. Define capability 10. Formulate 11. Appraise, 12. Modify goals Strategy
Track 3 gaps by assessing strategies test & if required, integration
strengths/ that yield reconcile set capability
weaknesses against competitive strategy functional development
current capabilities advantage with and
& specific
functional business
competitors in
selected segments plans/ objectives
needs
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 WANTS-GETS GRID
HIGH PERFORMANCE

Assistance
Consistent product
in cost control
quality and appearance

OVERACHIEVEMENT Reliable
delivery

Sales
support

UNDERACHIEVEMENT
Fast order
cycle
Access to top
Lead management
generation
HIGH IMPORTANCE
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 CONCEPTUAL MAP
The Business to Business Marketplace--Now
Percent of
all products

Pure Highly
Commodity Customized

The Business to Business Marketplace--Future

Percent of
all products

Pure Highly
Commodity Customized
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 VALUE CHAIN ANALYSIS

Share of user $
Manufacturers Specialty Dealers Users 2000 2005
1 wholesalers
120 150 300 40% 50%

Manufacturers Distributors Users 60% 50%

2 100% 100%
101 130 200

Total spending by users$10mm $15mm

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FIVE FORCES OF COMPETITION
Threat of
substitutes

Bargaining Struggles Bargaining

power of between power of
suppliers industry rivals customers

Threat of
potential
entrants

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 Vision for disruption
Identifying and creating oppor-
tunities for temporary advantage
through understanding
•Stakeholder satisfaction
•strategic soothsaying
Directed at identifying new ways
to serve existing customers
better or new customers
that no one else
serves now
Tactics
Capability
for disruption
for disruption Market
Seizing initiative to gain
disruption
Sustaining the momentum by advantage by
developing flexible capacities for: •Shifting the rules
•Speed •Signaling
•Surprise •Simultaneous & sequential
strategic thrusts
that can be applied across
with actions that shape, mold,
many actions to build a
or influence the direction of
series of temporary
nature of the competitors’
advantageous
responses
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 Arena 1 Arena 2 Arena 3 Arena 4
Cost & Quality Timing & know-how Strongholds Deep pockets

Disrupt Cat’s strategic strengths Outmaneuver Cat’s strengths (“Encircle Cat)

Boost Lower Timing Know-how Geographic

Channels Komatsu
quality cost Rolls out Aggressive Komatsu
Komatsu builds
one R&D and moves
moves to resources,
product new product out of
direct sales, new plants
at a time program Japanese
dealers, and user
stronghold to
then alliances to
Asia, Europe,
regional gain
South America,
centers strengths
and lastly
North America initially

Erodes Cat’s Picks off Undermines Erodes Maneuvers Erodes

premium price, Cat’s full Cat’s Cat’s World around Cat’s deep
global volume, line one Advantage Dominance Cat’s strong pockets
low costs by one On product One place dealer
innovation at a time network

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 REQUISITES FOR THE LEARNING
ORGANIZATION

Visionary Target & Creating &

X X Information X X Execution
leadership trajectory systems striving

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