Jumat, 21 Desember 2007
Operation Research, a maths based class
Wow, i learned many new methods 2 optimalize company transaction activity. Below is 3 method i learned : CPM to minimize ur weeks consruction schedule(and the cost of course), TRANSPORTATION to optimalize the shipment cost/profit, and last but not least is DELEGATION to delegate where/when ur worker must work 2 minimize the cost. Hope u'll enjoy it =)...Btw be sure 2 open the solver in excel(it's in the "option")
Smoke Research Part 2 : Don't forget that u need SPSS software 2 open this files
Like i said, install ur SPSS...U'll need it eventually 4 ur final research task.
Smoke Marketing Research, yeah this is What i said Research
And this is the real essence of marketing research...full of methods, with SPSS helps. I don't like maths, but lucky i love 2 imagine and planning...well this is my imaginary simple research about smoke...just like real, right =)...Notes that u'll find my extra attachment about this smoke research in my next blog. See my next blog ok.
Marketing Research, why did i need 2 find restaurant info?
Yes, just like the title..till now it still a confusing thing 4 me 2 do this task. It started when i take a vacation from my doctor's class...2 bad there's a quiz about parametric method(like maths) that day. So at the next week, i push my brave, and ask him 4 a replacement test 4 me...then this task just come in. Strange, but i hope u'll enjoy my restaurant info.
Financial Management, Risk and Return Theory
I did this task about 2 years ago. The interesting thing about this task, is that i need 2 find the clue myself about this topic(with book help of course)...My teacher only said that if i could presented this chapter without his guide, he'll gave me 5 poin extra in my score...yet, he forget about this presentation task in the next week. Well, i said it's not a worthless task, coz it could help u, right =)
Management Overview, Taco Bell Structure Case
This management overview class is full of management theory,... but thank god there're still some case 2 analyse...Lucky 2, this class also handled with a friendly teacher, Mrs Bernadine(Dino)...Mrs Dino ask this job three years ago, so this also some of my early tasks. It's about an organizational structure problem, especially in Taco Bell company. Hope u'll enjoy it =)
Business Communication, let's make a Unique Products
Well, this is one of my early task..it's about three years ago..my friendly lecturer, Mrs Genoveva(Jane) give us a task 2 design a product....suddenly my crazy inspiration just came out. With some unique fashion products, and with a drama in our presentation...Mrs Jane said it's a success =)
Finance Proposal Analysis, an Exciting Activity
If u want 2 play stocks or bonds in financial market, i say this is a good pre class to learned for. This is an example of the analysis of telecommunication industry in Indonesia, especially in Bakrie company(esia cdma). Enjoy it
Promotional Mix for Ur Business
I learned this theories in my "Promotion Management" class...boring sometimes, but i guess it's an exciting class..if there're more examples ads in these theories...Hope u'll enjoy it, and it could help u in ur study =)
Making simple business inventory system with microsoft access
As a business college student, at least u need 2 know about some easy business computer system...well in this business information system class, i've learned some access stuff...& with a quite stresswork(it's quite hard 4 me), here it is
Kamis, 20 Desember 2007
Magang...Like a Part Time Job =)
I like this task...For 2 months, i did a salesman job, an MC Job, a Driver Job,a Sales Promotion Boy Job, an an Event Organizer...Wuihh,tired but exciting. I work in Drawing school 4 children....Thx 2 Global Art Kelapa Gading, experience 2 handle children( age 3-6) is unforgettable.
free sex in religion's view....well, u need 2 read this 2 see youngster's trend
it's my religion tasks in college..my teacher want me 2 describe the impact of pornografi in social aspect...well just a little religion, yet so many sociology aspect.
Banking and Financial Institution...What did Bank See 2 Lend U a Loan?
This is quite hard tasks, even though not as hard as my factoring task....It's not a success tasks,that's what he(professor) said...but i'm glad i've try it =)
banking and other financial institution
my2...this is my very unforgettable tasks.I need alot of time 2 finish this job, with so little time given by my professor....it"s about factoring and credit card...hope u'll enjoy it.
Franchise Case: "Edam Burger VS Blenger Burger"
Hope this example could help u in ur marketing study...GBU
Japanesse Inn and Onsen, A Unique Business
onsen
Natural hot springs (onsen) are numerous and highly popular across Japan. Every region of the country has its share of hot springs and resort towns, which come with them.
There are many types of hot springs, distinguished by the minerals dissolved in the water. Different minerals provide different health benefits, and all hot springs are supposed to have a relaxing effect on your body and mind.
Hot spring baths come in many varieties, indoors and outdoors, gender separated and mixed, developed and undeveloped. Many hot spring baths belong to a ryokan, while others are public bath houses. An overnight stay at a hot spring ryokan is a highly recommended experience to any visitor of Japan.
ryokan
Ryokan are Japanese style inns. They come in all sizes and are found across Japan. A stay at a ryokan is highly recommended to all foreign visitors of Japan, as it offers the opportunity to experience a traditional Japanese atmosphere.
Typical rates for ryokan range between 6,000 and 20,000 Yen per night and person, but some no-frills establishments offer rooms for less.
Guests stay in Japanese style rooms with tatami floor and a low table. Shoes are usually removed at the ryokan's main entrance, where slippers will be kept ready. You are supposed to remove even your slippers before stepping onto tatami mats.
Except in case of inexpensive ryokan, dinner and breakfast are included in the overnight stay. At the better ryokan, meals are served in the guest room, while common dining rooms are to be used elsewhere. Both meals are typically Japanese style and often feature regional specialties.
A yukata (Japanese dress) is provided to be worn during your stay at the ryokan. The yukata can be used for walking around the ryokan and as pajamas. In many onsen resorts, it is also okay to take a walk outside of the ryokan in your yukata. Note, however, that unlike the yukata provided at ryokan, the yukata provided at Western style hotels are not supposed to be worn outside of your room.
tatami
A lot of Japanese households consist of both, one or more traditional Japanese style rooms with tatami floors and modern rooms that usually have wooden floors. Tatami mats are made of straw and measure roughly 180 cm x 90 cm. You should always take off your slippers when stepping on tatami mats in order to protect them from damage.
Traditional Japanese style tatami rooms have an alcove (tokonoma) in which a hanging scroll (kakejiku) and a flower arrangement (ikebana) or piece of pottery is displayed. The room entrances are sliding paper doors (fusuma) and sliding paper screens (shoji) which can be removed completely.
futon
The traditional Japanese bed is a futon which is laid on the floor only during the night and kept in a closet (oshiire) during the daytime. Consequently, the bedroom can then also function as a living or dining room
kotatsu
Most houses in Japan do not have central heating. Instead, gas, oil and electric ovens and air conditioners are used to heat single rooms. The heating devices are turned off during the night and when nobody is in the room. Furthermore, a heatable table (kotatsu) is a very popular furniture during the cooler time of the year.
kimono and yukata
Kimono are made of silk and are usually very expensive. Nowadays they are worn at formal or traditional occasions such as funerals, weddings or tea ceremonies. Only rarely kimono can still be seen in everyday life.
Kimono differ in style and color depending on the occasion on which it is worn and the age and marital status of the person wearing it. To put on a kimono needs some practice. Especially tying the belt (obi) alone is difficult so that many people require assistance. Wearing a kimono properly includes proper hair style, traditional shoes, socks, underwear, and a small handbag for women.
The yukata, on the other hand, is more of an informal leisure clothing. It can even be worn without underwear and is very comfortable on hot summer days or after a hot bath. Yukata are relatively inexpensive and made of cotton. While staying at a ryokan, you will be provided with a yukata.
how to take a bath in onsen :
Below is the description of the most common way of taking a bath in a hot spring (or public bath). The actual rules may be different depending on the place, but if you follow the instructions below, you should be okay most of the time.
Take off all your clothes in the changing room and place them into a basket together with your bath towel. Coin lockers for valuables are often available.
2) Japanese hot springs are enjoyed naked. Swimming suits are not allowed in most places. However, it is the custom to bring a small towel into the bathing area, with which you can enhance your privacy while outside of the water. Once you enter the bath, keep the towel out of the water.
3) Before entering the bath, rinse your body with water from either a tap or the bath using a washbowl provided in the bathing area. Just rinsing your body is usually sufficient unless you are excessively dirty, in which case you want to use soap.
4) Enter the bath and soak for a while. Note that the bath water can be very hot (typical temperatures are 40 to 44 degrees). If it feels too hot, try to enter very slowly and move as little as possible.
5) After soaking for a while, get out of the bath and wash your body with soap at a water tap, while sitting on a stool. Soap and shampoo are provided in some baths. Like in private Japanese bathrooms, make sure that no soap gets into the bath water. Tidy up your space after you finished cleaning your body.
6) Re-enter the bath and soak some more.
7) After you finished soaking, do not rinse your body with tap water, for the minerals to have full effect on your body.
Natural hot springs (onsen) are numerous and highly popular across Japan. Every region of the country has its share of hot springs and resort towns, which come with them.
There are many types of hot springs, distinguished by the minerals dissolved in the water. Different minerals provide different health benefits, and all hot springs are supposed to have a relaxing effect on your body and mind.
Hot spring baths come in many varieties, indoors and outdoors, gender separated and mixed, developed and undeveloped. Many hot spring baths belong to a ryokan, while others are public bath houses. An overnight stay at a hot spring ryokan is a highly recommended experience to any visitor of Japan.
ryokan
Ryokan are Japanese style inns. They come in all sizes and are found across Japan. A stay at a ryokan is highly recommended to all foreign visitors of Japan, as it offers the opportunity to experience a traditional Japanese atmosphere.
Typical rates for ryokan range between 6,000 and 20,000 Yen per night and person, but some no-frills establishments offer rooms for less.
Guests stay in Japanese style rooms with tatami floor and a low table. Shoes are usually removed at the ryokan's main entrance, where slippers will be kept ready. You are supposed to remove even your slippers before stepping onto tatami mats.
Except in case of inexpensive ryokan, dinner and breakfast are included in the overnight stay. At the better ryokan, meals are served in the guest room, while common dining rooms are to be used elsewhere. Both meals are typically Japanese style and often feature regional specialties.
A yukata (Japanese dress) is provided to be worn during your stay at the ryokan. The yukata can be used for walking around the ryokan and as pajamas. In many onsen resorts, it is also okay to take a walk outside of the ryokan in your yukata. Note, however, that unlike the yukata provided at ryokan, the yukata provided at Western style hotels are not supposed to be worn outside of your room.
tatami
A lot of Japanese households consist of both, one or more traditional Japanese style rooms with tatami floors and modern rooms that usually have wooden floors. Tatami mats are made of straw and measure roughly 180 cm x 90 cm. You should always take off your slippers when stepping on tatami mats in order to protect them from damage.
Traditional Japanese style tatami rooms have an alcove (tokonoma) in which a hanging scroll (kakejiku) and a flower arrangement (ikebana) or piece of pottery is displayed. The room entrances are sliding paper doors (fusuma) and sliding paper screens (shoji) which can be removed completely.
futon
The traditional Japanese bed is a futon which is laid on the floor only during the night and kept in a closet (oshiire) during the daytime. Consequently, the bedroom can then also function as a living or dining room
kotatsu
Most houses in Japan do not have central heating. Instead, gas, oil and electric ovens and air conditioners are used to heat single rooms. The heating devices are turned off during the night and when nobody is in the room. Furthermore, a heatable table (kotatsu) is a very popular furniture during the cooler time of the year.
kimono and yukata
Kimono are made of silk and are usually very expensive. Nowadays they are worn at formal or traditional occasions such as funerals, weddings or tea ceremonies. Only rarely kimono can still be seen in everyday life.
Kimono differ in style and color depending on the occasion on which it is worn and the age and marital status of the person wearing it. To put on a kimono needs some practice. Especially tying the belt (obi) alone is difficult so that many people require assistance. Wearing a kimono properly includes proper hair style, traditional shoes, socks, underwear, and a small handbag for women.
The yukata, on the other hand, is more of an informal leisure clothing. It can even be worn without underwear and is very comfortable on hot summer days or after a hot bath. Yukata are relatively inexpensive and made of cotton. While staying at a ryokan, you will be provided with a yukata.
how to take a bath in onsen :
Below is the description of the most common way of taking a bath in a hot spring (or public bath). The actual rules may be different depending on the place, but if you follow the instructions below, you should be okay most of the time.
Take off all your clothes in the changing room and place them into a basket together with your bath towel. Coin lockers for valuables are often available.
2) Japanese hot springs are enjoyed naked. Swimming suits are not allowed in most places. However, it is the custom to bring a small towel into the bathing area, with which you can enhance your privacy while outside of the water. Once you enter the bath, keep the towel out of the water.
3) Before entering the bath, rinse your body with water from either a tap or the bath using a washbowl provided in the bathing area. Just rinsing your body is usually sufficient unless you are excessively dirty, in which case you want to use soap.
4) Enter the bath and soak for a while. Note that the bath water can be very hot (typical temperatures are 40 to 44 degrees). If it feels too hot, try to enter very slowly and move as little as possible.
5) After soaking for a while, get out of the bath and wash your body with soap at a water tap, while sitting on a stool. Soap and shampoo are provided in some baths. Like in private Japanese bathrooms, make sure that no soap gets into the bath water. Tidy up your space after you finished cleaning your body.
6) Re-enter the bath and soak some more.
7) After you finished soaking, do not rinse your body with tap water, for the minerals to have full effect on your body.
My Marketing Plan : "F1 Experience"
This is an Example of my Tasks in IBII. F1 Experience, marketing aspect...
Retailing Industry
Food for thoughtThomas Barnwell, Victor Beliakov. Asian Business. Hong Kong:Jun 2001. Vol.37, Iss. 6, p. 66-67 (2 pp.) Abstract (Summary) Apart from recent weeks, the past 12 months have been cruel to technologystocks, especially to dotcom stocks engaged in online retailing. But whether ornot technology shares are making a real comeback or just experiencing the"dead-cat bounce," one group of stocks has enjoyed a very good year. Thecurrent valuations of the top grocery retailers are now comparable tovaluations of technology bellwethers such as Microsoft and Dell. Moreover,these valuations imply significant long-term growth at rates that seemextraordinary. Take, for example, Ahold. This retailer managed to increasesales by 56% last year to nearly US$50 billion. The Dutch grocery retailer isnow the second largest food retailer in the world after France's Carrefour. Full Text (1190 words) Copyright Far East Trade Press Ltd. Jun 2001 [Headnote] Bricks-and-mortar grocer could be a bargain buy Apart from recent weeks, the past 12 months have been cruel to technologystocks, especially to dotcom stocks engaged in online retailing. But whether ornot technology shares are making a real comeback or just experiencing the"deadcat bounce", one group of stocks has enjoyed a very good year - groceryretailers. In fact, many of these oldeconomy, "bricks-and-mortar" firms havereached lofty levels. The current valuations of the top grocery retailers, including France'sCarrefour (PIE of 43), Britain's Tesco (PIE of 24) and Holland's Royal Ahold(PlE of 27) are now comparable to valuations of technology bellwethers such asMicrosoft (PB of 39) and Dell (PIE of 32). Moreover, these valuations implysignificant long-term growth at rates that seem extraordinary. According tomanagement consultancy McKinsey, the market values of grocery retailers such asCarrefour show that current performance accounts for only one-third of theircapitalisation and investor's growth expectations for the rest. While technology analysts and the investing public expected phenomenal growthin flashy new economy firms, many boring, old grocers have grown remarkably,and have expanded their businesses in many parts of the world. Take, forexample, Ahold (NYSE: AHO). This 114-year-old Dutch retailer managed toincrease sales by 56% last year to nearly US$ 50 billion. Sales at Aholdactually rose during each of the previous five years by a total of 291%. True,acquisitions played an important role in Ahold's growth, but many tech firms,such as Cisco Systems, have been on a shopping spree as well. The Dutch grocery retailer is now the second largest food retailer in the worldafter France's Carrefour, which increased sales by 73% in 2000, to roughlyUS$60 billion. Not far behind is the United States supermarket giant Kroger,with US$49 billion in 2000 sales. But unlike Kroger and the majority of otherAmerican food retailers, Ahold and Carrefour derive the bulk of their salesfrom outside their home countries. Ahold operates about 8,500 supermarkets in25 countries, including the US, where it had more than 1,300 stores at year-end2000, and throughout several European countries, where it operates more than6,600 stores.
Ahold is unique among European grocery retailers, in that it has managed tobecome the dominant player in the US market. The US is now the largest singlemarket for the company (60% of sales), where it generates about two-thirds ofits operating profits. Ahold's US operating margins are 4.9% - very high forthe US grocery industry, which had an industry average of 1.6% in 1999. Andsales per square metre at Ahold's US stores are by far the highest in thecountry. With a total of just 80 stores in Asia, Ahold has operations in Thailand,Malaysia and Indonesia. Asia represents only 1% of the company's sales, and itis the only region where Ahold has been losing money. It had joint ventureswith supermarket chains in China (40 stores) and in Singapore (13 stores) butretreated from those markets when it realised it could not meet itsprofitability targets there. Generally, Ahold's approach to crossborder acquisitions and global operationshas been successful in other regions. The company emphasises local controls andmaximises the know-how of local managers. Normally, Ahold buys onlywellestablished local retailers and retains their names. It also relies onlocal expertise in product assortment, pricing policies and store formats. But Ahold unites its supermarkets globally by joint purchasing and deliverysystems, and standardised information systems. The result is, food suppliersrecognise Ahold as a unified global buyer, while customers still see the namesthey know well. With its experience of buying and integrating a total of 5,900 supermarketsworldwide over the past nine years, Ahold's lack of success in Asia may beexplained, in part, by the current foodretailing environment in Asia. Ahold must compete with both the popular local street stalls on the one hand,and with the established hypermarkets of its European rivals, Carrefour andTesco, on the other. In the US and other places where Ahold has bought aconcentrated market share, it is doing well. In Asia, where Ahold's presence isquite limited, economies of scale and efficiencies of operations are muchharder to achieve. The challenge now facing Ahold is to turn its Asian operations into aprofitable business, without relying on its traditional acquisition strategy.Ahold's debt level has risen significantly, because of heavy borrowing. Instead, the company has announced it will emphasise organic growth. Althoughorganic growth is inherently slower than growth through acquisition, Aholdbelieves that its business is large enough to provide opportunities to grow onan organic basis. Management has highlighted four areas for organic growth: 1)increased sales per square metre in existing stores; 2) increased gross margin;3) reduced costs; 4) improved capital efficiency. Can the organic-growth strategy succeed? The company has already proved itsability to generate higher sales per square metre than its competitors in theUS. It certainly has room for improvement in other countries. And it seems possible to increase gross margin. Ahold now claims to be thebiggest food provider in the world (in addition to food retailing, it also haslarge food service operations in the US) and it is looking to leverage thisposition. The company expects to gain the most from secondary brands and private labels.Additionally, increases in non-food sales and services will improve grossmargins. The company also believes there is significant scope to reduce coststhrough the use of technology. Ahold expects sales in 2001 to grow by 24% and net earnings by 15%. Someanalysts think the 15% target is conservative. Others argue that unless Aholdmakes sizeable investments in emerging markets, it will be difficult to producemore than 10% growth in earnings through organic growth. Ahold firmly believes the company has the right "multi" strategy -multichannel, multi-region and multi-format a strategy it is steadily pursuing.And without the hype that accompanied retailers of the "new economy", the oldDutch grocer is going online. Last year, when valuations of Peapod, astruggling web grocer, adjusted to reasonable levels, Ahold bought acontrolling stake in the internet venture and gradually adapted it to servecustomers of its grocery chains. This strategy is now showing promise: Peapodannounced an operating profit in its Chicago operation. As for the parent's own online efforts, Ahold says its internet operations inHolland have been profitable for two years, where they account for about 1% oftotal sales. Online or offline, grocery retailing remains a highly local business, whichmust be close to the customer. The recent drive for global consolidation in anindustry where low margins make it difficult to succeed even in one country,raises the question: who will lead the race as the global food retailer? We believe Ahold is one of the strongest contenders. While that does not meanyou should rush to buy shares of Ahold at current valuations, you should, likeall smart shoppers, keep an eye out for quality and a good sale price. In theend, you may find a bargain with the old Dutch grocer. Indexing (document details) Subjects: Grocery stores, Financial performance, Corporateprofiles, Strategic planning, Stockprices, International markets Classification Codes 9175, 9110, 3400, 8390, 2310, 9179 Locations: Netherlands, Asia Companies: Royal Ahold NV (NAICS: 445110 ) Author(s): Thomas Barnwell, Victor Beliakov Document types: Feature Publication title: Asian Business. Hong Kong: Jun 2001. Vol. 37, Iss. 6; pg. 66, 2 pgs Source type: Periodical ISSN: 02543729 ProQuest document 73698939ID: Text Word Count 1190 Document URL: http://proquest.umi.com/pqdweb?did=73698939&Fmt=4&clientId=66959&RQT=309&VName=PQD
Ahold is unique among European grocery retailers, in that it has managed tobecome the dominant player in the US market. The US is now the largest singlemarket for the company (60% of sales), where it generates about two-thirds ofits operating profits. Ahold's US operating margins are 4.9% - very high forthe US grocery industry, which had an industry average of 1.6% in 1999. Andsales per square metre at Ahold's US stores are by far the highest in thecountry. With a total of just 80 stores in Asia, Ahold has operations in Thailand,Malaysia and Indonesia. Asia represents only 1% of the company's sales, and itis the only region where Ahold has been losing money. It had joint ventureswith supermarket chains in China (40 stores) and in Singapore (13 stores) butretreated from those markets when it realised it could not meet itsprofitability targets there. Generally, Ahold's approach to crossborder acquisitions and global operationshas been successful in other regions. The company emphasises local controls andmaximises the know-how of local managers. Normally, Ahold buys onlywellestablished local retailers and retains their names. It also relies onlocal expertise in product assortment, pricing policies and store formats. But Ahold unites its supermarkets globally by joint purchasing and deliverysystems, and standardised information systems. The result is, food suppliersrecognise Ahold as a unified global buyer, while customers still see the namesthey know well. With its experience of buying and integrating a total of 5,900 supermarketsworldwide over the past nine years, Ahold's lack of success in Asia may beexplained, in part, by the current foodretailing environment in Asia. Ahold must compete with both the popular local street stalls on the one hand,and with the established hypermarkets of its European rivals, Carrefour andTesco, on the other. In the US and other places where Ahold has bought aconcentrated market share, it is doing well. In Asia, where Ahold's presence isquite limited, economies of scale and efficiencies of operations are muchharder to achieve. The challenge now facing Ahold is to turn its Asian operations into aprofitable business, without relying on its traditional acquisition strategy.Ahold's debt level has risen significantly, because of heavy borrowing. Instead, the company has announced it will emphasise organic growth. Althoughorganic growth is inherently slower than growth through acquisition, Aholdbelieves that its business is large enough to provide opportunities to grow onan organic basis. Management has highlighted four areas for organic growth: 1)increased sales per square metre in existing stores; 2) increased gross margin;3) reduced costs; 4) improved capital efficiency. Can the organic-growth strategy succeed? The company has already proved itsability to generate higher sales per square metre than its competitors in theUS. It certainly has room for improvement in other countries. And it seems possible to increase gross margin. Ahold now claims to be thebiggest food provider in the world (in addition to food retailing, it also haslarge food service operations in the US) and it is looking to leverage thisposition. The company expects to gain the most from secondary brands and private labels.Additionally, increases in non-food sales and services will improve grossmargins. The company also believes there is significant scope to reduce coststhrough the use of technology. Ahold expects sales in 2001 to grow by 24% and net earnings by 15%. Someanalysts think the 15% target is conservative. Others argue that unless Aholdmakes sizeable investments in emerging markets, it will be difficult to producemore than 10% growth in earnings through organic growth. Ahold firmly believes the company has the right "multi" strategy -multichannel, multi-region and multi-format a strategy it is steadily pursuing.And without the hype that accompanied retailers of the "new economy", the oldDutch grocer is going online. Last year, when valuations of Peapod, astruggling web grocer, adjusted to reasonable levels, Ahold bought acontrolling stake in the internet venture and gradually adapted it to servecustomers of its grocery chains. This strategy is now showing promise: Peapodannounced an operating profit in its Chicago operation. As for the parent's own online efforts, Ahold says its internet operations inHolland have been profitable for two years, where they account for about 1% oftotal sales. Online or offline, grocery retailing remains a highly local business, whichmust be close to the customer. The recent drive for global consolidation in anindustry where low margins make it difficult to succeed even in one country,raises the question: who will lead the race as the global food retailer? We believe Ahold is one of the strongest contenders. While that does not meanyou should rush to buy shares of Ahold at current valuations, you should, likeall smart shoppers, keep an eye out for quality and a good sale price. In theend, you may find a bargain with the old Dutch grocer. Indexing (document details) Subjects: Grocery stores, Financial performance, Corporateprofiles, Strategic planning, Stockprices, International markets Classification Codes 9175, 9110, 3400, 8390, 2310, 9179 Locations: Netherlands, Asia Companies: Royal Ahold NV (NAICS: 445110 ) Author(s): Thomas Barnwell, Victor Beliakov Document types: Feature Publication title: Asian Business. Hong Kong: Jun 2001. Vol. 37, Iss. 6; pg. 66, 2 pgs Source type: Periodical ISSN: 02543729 ProQuest document 73698939ID: Text Word Count 1190 Document URL: http://proquest.umi.com/pqdweb?did=73698939&Fmt=4&clientId=66959&RQT=309&VName=PQD
Grand Strategy Alternative and BCG Matrix
What You Always Wanted to Know About Marketing Strategy . .McDonald, Gael, Roberts, Christopher. Management Decision. London:1992. Vol. 30, Iss. 7, p. 54 (7 pp.)
Abstract (Summary)
Strategic planning is surrounded by a veil of complexity that many are unable to penetrate. The terminology outlining strategic options can be confusingly repetitive. The tools, options, and current buzzwords used in marketing strategy are reviewed in an effort to lift the veil of complexity surrounding marketing strategy. Conceptual tools used in the strategic planning process include: 1. business portfolio analysis, 2. the Boston Consulting Group (BCG) Growth Share Matrix, 3. company life cycle patterns, and 4. the new BCG Matrix. Corporate strategies may be classified under 4 broad headings: 1. stability, 2. growth, 3. retrenchment, and 4. combination. Market leader strategies include market penetration, market development, differentiation, and cost leadership. Market challenger strategies include product proliferation, diversification, and integration. Focus strategy and niche marketing are market specialization strategies.
Full Text (4300 words)
Copyright MCB University Press Limited 1992
Reading three texts on strategic marketing is rather like asking ten different economists for a definition of economics. One receives ten different answers and a distinct impression that one would have been better off not asking the question in the first place. Similarly, reading three texts on strategic marketing may be worse than reading one. For a start, the terminology gets confusing; what is referred to as diversification in one text may well be called integration in another. If that is not clear, then start to wrestle with the fact that integration strategies may be delineated between vertical, backward, and lateral alternatives. Given expressions such as by-pass attack, pre-emptive defence, counter-offensive and mobile defence, is it any wonder that marketers feel they are indulging in some form of martial arts, rather than making meaningful decisions about the future plans and investments of their organizations?
So, why has all the confusion arisen? Initially, it should be realized that many of the analytic and conceptual tools used in strategic marketing planning, such as the General Electric Multi-Factor Portfolio Matrix, and the Boston Consulting Group Growth Share Matrix, are exactly that --conceptual tools. These tools were developed to assist marketers in analysing the market situation; they do not provide strategic solutions, beyond a general level, to a particular problem. For example, having used the Growth Share matrix and identified a product as a "dog"--that is, a product or division that occupies relatively low market share in a low growth market--such categorization, whilst informative from a strategic viewpoint, is of little help in formulating a strategic response. Marketing strategy, however, demands that marketers go beyond preliminary analysis and formulate a detailed strategic response that is appropriate in a given market situation. In the case of the "dog" product, the appropriate strategic response would likely be divestment.
Much of the language used in strategic marketing is descriptive. For example, the General Electric matrix offers alternative general descriptions for companies in positions of relative competitive strength or weakness. This grid plots strategic position against measures of industry attractiveness and business strengths, projecting three general alternatives: to invest, selectively manage, or divest. However, this diagnosis is of limited value in that it does not address the issue of how the three strategic alternatives are to be implemented. Frequently, little reference is given to the practicalities of how a strategy is to be achieved, or illustrations of how a strategy has been successfully actualized in the past. Descriptions, therefore, act as guidelines that indicate general alternatives, but no more. They do not offer the finer detail of a tactical solution and therein lie their principal limitations.
A further difficulty with strategic formulation is that it is difficult to extrapolate the experience of one firm, in that circumstances are very idiosyncratic. What suits one company in a given situation may poorly serve another. Indeed, companies engaged in the same marketplace, and in possession of similar market intelligence, may devise strategic prescriptions that are fundamentally different. For example, in the tyre business a massive volume, low-cost strategy was selected by Goodyear. A strong production emphasis generated significant manufacturing economies and a strategy of marketplace cost leadership. In contrast, the French tyre manufacturer Michelin, with an emphasis on research and development, chose the new technology route and pioneered the radial tyre which redefined customer needs and eventually rendered the cross-ply tyre obsolete. Interestingly, Dunlop's technical director dispensed with the radial tyre by declaring it a "marketing gimmick" 1, p. 154!. The technology leadership strategy of Michelin is, however, removed from the specialist application strategy adopted by Armstrong Rubber, an American manufacturer that concentrates on the production of tyres for the aviation, agricultural, and civil engineering industries. The focused strategy used by Armstrong provides a profitable alternative approach to engaging in direct competition with global heavyweights in the tyre industry.
MARKETING IS MERELY A CIVILIZED FORM OF WARFARE
Marketing is merely a civilized form of warfare, in which most battles are won with words, ideas, and disciplined thinking 2, p. 3!, supplemented with generous portions of creativity. For one player, this combination may yield a strategic formulation that is a virtual inversion of a close competitor's strategy. In the civil airframe business, in the 1960s, European manufacturers opted for the high-tech solution with Concorde, whereas the American manufacturer, Boeing, chose to build on existing technology and develop a large capacity aircraft for the mass market, the B747. The two strategies are akin to the tortoise and the hare, in this case the tortoise won. The B747 has been operational for 22 years and it is, arguably, the world's most successful civil aircraft. Concorde has been operational for 16 years and less than a dozen planes are in service.
It has been said, "Define your terms and we shall talk" but, then again, all definitions may be dangerous. This sort of dilemma is, without doubt, a source of confusion in strategic planning; the nomenclature is almost intimidating. Guerrilla, by-pass attack, and mobile defence strategies make marketing sound as if it were extracted from the curriculum of a military academy. The analogy between military and marketing strategy has some value, but it is imperfect. The similarities are obvious. Beat the enemy (competitors) to gain territory (customers). However, the objectives of military and marketing strategy are different. Marketing creates value and enhances product utility, warfare merely transfers value and is often destructive of life and property 3, p. 37!. The terminology outlining strategic options can also be confusingly repetitive. A strategic option may be justified by a company in a market-leader position and, similarly, by one in a market-follower position. Consequently, the same strategy reappears but under a different set of circumstances, one sometimes it is renamed by enthusiastic academics attempting to undertake their own form of differentiation. So what alternatives are available to the marketing strategist? The following provides a brief review of the tools, options and the current "buzz" words used in the combat zone of marketing strategy.
CONCEPTUAL TOOLS IN STRATEGIC PLANNING
The conceptual tools used in the strategic planning process are not strategies in themselves; rather they are the means by which management may evaluate the strategic business units that constitute the company.
BUSINESS PORTFOLIO ANALYSIS
This identifies the strategic business units that make up the company and attempts to evaluate current effectiveness and vulnerabilities. A strategic business unit is any unit in the organization with its own mission, objectives and planning autonomy.
BOSTON CONSULTING GROUP GROWTH SHARE MATRIX
Assists marketers to identify high and low potential business units or products. This two-by-two matrix has, on the vertical axis, market growth rate, which provides a measure of market attractiveness and, on the horizontal axis, market share relative to the largest competitor, which serves as a measure of company strength in the market.
DEFINITIONS MAY BE DANGEROUS THE NOMENCLATURE IS ALMOST INTIMIDATING
Four categories are depicted in this matrix, briefly they are:
(1) Cash cows (low growth, high market share) produce large amounts of cash but future growth is limited. A harvest strategy is usually recommended, in that the organization is advised to reap whatever they can but not to resow the seed. Too many cash cows may indicate a degree of complacency on the part of the company. Exceptions are naturally to be found and McDonalds, in the United States, is a good example of a leader in a cash-cow market that is still heavily investing in new technologies and products designed to maintain market share and defend a dominant position.
(2) Sirs (high growth, high market share) are products that produce large amounts of cash in a fast-growing market, in which they hold a dominant share. An example of a star is the "Post It" produced by 3M. Clearly an investment and growth strategy is recommended, particularly as the direct competition for this brand is weak.
(3) Question marks (high growth, low market share) exist under higher risk circumstances, in that the products are profitable but only manage to secure a small share of the total market. Commonly, a build strategy is recommended although rapid growth may attract the attentions of the "big guns" who may convert a highly profitable niche into a fully-fledged segment of large volume, thereby frustrating the endeavours of lesser firms. The "big guns" frequently possess greater production and marketing economies, which make it difficult for a smaller competitor to gain market share.
(4) Dogs (low growth, low market share). Because of the limited share size and low growth, products or strategic business units which are "dogs" do not generate much revenue. A typical strategy would be to divest by selling off the "dogs" in order to release money to support the "question marks".
COMPANY LIFE CYCLE PATTERNS
Company life-cycle patterns classify businesses into embryonic, growth, maturity, and decline stages. Utilizing the distinctions of market growth and market share, the model has some parallels with the Boston Consulting Group Matrix.
THE NEW BCG MATRIX
Updating the original matrix, the revised BCG matrix maintains that a company has to achieve a competitive advantage to enjoy sustained profitability, and that the means for achieving such advantage are conditioned by the way in which industries evolve.
A COMPANY HAS TO ACHIEVE COMPETITIVE ADVANTAGE
The two-by-two matrix employs distinctions of size, and the number of ways to achieve competitive advantage, yielding four industry classifications:
(1) Stalemate--few ways, small size. this implies limited means to obtain an advantage and the advantage, when obtained, is small.
(2) Volume--few ways, large size. There are only a few means to obtain an advantage but, if obtained it generates high volume.
(3) Specialization many ways, large size. There are several alternative ways to derive an advantage and, once obtained, it is large.
(4) Fragmentation many ways, small size. There are many ways to obtain an advantage, but the advantage is minimal.
BASIC STRATEGIC OPTIONS
From this examination of some of the tools associated with strategic planning, it is now appropriate to review options. Corporate strategies may be classified under four broad headings:
STABILITY
This strategy occurs when an organization achieves a satisfactory performance under stable market conditions. The usual practices engaged in to achieve stability involve the maintenance of market share and return on investment through better serving existing client groups. In mature marketplaces, demonstrating low or no growth, marketers are expected to execute their strategic plans more incisively. Under these conditions, stability could be achieved through intensive distribution, thereby enhancing convenience and levels of service, or by rejuvenating the brand by adjusting its image or packaging.
GROWTH
A growth strategy is usually formulated in the wake of establishing developmental goals that seek to take advantage of perceived market opportunities. When discussing growth strategies, it is common to hear suggestions of physical expansion, acquisitions, mergers and diversification. Growth strategies could be precipitated by the combined efforts of competitors to expand aggregate demand, or by one company that secures a larger slice of the pie as a direct consequence of its strategy, e.g. softening prices.
RETRENCHMENT
Retrenchment is a common strategic response in markers that are subject to adverse economic pressures, uncertainty, or cheap foreign competition. Retrenchment can be differentiated from divestment, in that the former is a reaction to temporary hardships whereas divestment has the element of permanency about it.
COMBINATION
A combination strategy refers to the pursuit of different strategies in separate strategic business units. The combination approach suggests that in multi-division, multi-product companies there might not be a unifying strategy that serves the best interests of all divisions. Different geographic, customer, or competitive variables necessitate more individualistic solutions, that operate concurrently within the corporate framework. Having said this, though, it is usual to expect strategic business unit approaches to be consistent with established corporate designs, i.e. the mission statement and group policies.
Inevitably, these four strategies are frequently viewed as being too generalized to be of any practical use and, therefore, more precise strategic formulations are necessary to direct action in a specific sense. Let us examine the category of "growth strategies" because, invariably, this category generates the greater number of suggestions. These strategies are, to a large extent, dependent upon market position leader, challenger, follower, nicher.
MARKET LEADER STRATEGIES EXPANDING MARKET SHARE
It should be noted that these strategies are not the monopoly of market leaders; however, it is common to observe the following strategic practices among leaders.
MARKET PENETRATION
The main task here is to increase sales by encouraging wider usage of existing products by existing customers --for example, this could be achieved in the market for sunglasses by promoting the product as a fashion accessory. Increased frequency could be achieved by suggesting two applications of floor wax rather than one, or by formulating an extra-mild shampoo with the directive to consumers to wash their hair every day, e.g. Timotei shampoo produced by Elida Gibbs. Years ago, Wrigley's chewing gum successfully implemented this strategy with their advertisements for pellet-form chewing gum. The advertisements depicted an open hand receiving not one but two pellets of gum from a generous friend, thus creating future behavioural expectations of two pieces rather than one.
MARKET DEVELOPMENT
The entering of new markets could involve expansion into new geographic areas, both local and foreign, a shift from consumer to industrial markets or, possibly, marketing the product or service to new segments or demographic groups. An instance of the latter was provided by the banks which once perceived their role to be servicing commercial clients. Subsequently, they initiated concerted efforts to attract school leavers, students and new graduate depositors. Targeting these new demographic groups has provided new market development opportunities. More recently, high net worth customers have become the focus of many banks. New uses were extensively created by Hallmark cards, who regard themselves as being in the "social greetings business". A casual glance at their product range demonstrates a large variety of circumstances in which a card could be purchased, e.g. secretaries' day, pets' day, and congratulations on your divorce! In response to a decline in home baking, and with the advent of cake mixes, Arm & Hammer, makers of baking soda, promoted the use of their product not only as an ingredient for baking, but as a deodorizer for use in the refrigerator as well.
DIFFERENTIATION
With a strategy of differentiation the product itself may not be altered, or improved in some way. While reformulation is a possibility, it may well be that emphasis is placed on product positioning efforts and the attendant perceptions of consumers. One brand of tomato ketchup is very much like another, with the exception of the way in which it is perceived by consumers in relation to competing brands. The liquor industry utilizes image concept differentiation strategies and the successful marketing of whisky is strongly dependent upon establishing distinctive positioning, e.g. Chivas Regal.
ATTENTION NEEDS TO BE GIVEN TO THE COMMUNICATIONS MIX
Successful differentiation frequently confers higher perceived value or status, which enables marketers to price up, command a prominent market position, and enjoy superior profits. With this strategy a lot more attention needs to be given to the communications mix and the way in which it contributes to a brand's perceptual development among target consumers. Beecham's successfully implemented this strategy with Lucozade. Without changing the product formula, Beecham's, with a little help from Daley Thompson, were able to reposition the brand as an energy/sports drink as opposed to a beverage for invalids and convalescing children.
COST LEADERSHIP
This alternative is often used as a counter-offensive strategy, in that the company attempts to achieve the lowest costs of production and distribution to price lower than its competitors, thereby winning market share. Texas Instruments is a commonly quoted example of a high-tech manufacturer that concentrates its efforts on improved efficiencies, enhanced technology, and production volumes, as the means for driving costs down. Lower costs are passed on to the consumer in the form of lower prices, thereby making Texas Instruments highly competitive in world markets. Likewise, McDonald's pursuit of value for money constantly drives the company to seek newer and better ways to achieve greater economies and cost reductions. Virgin Atlantic's pricing on the North Atlantic route is another prominent example of a cost leadership strategy that successfully drew business away from considerably larger, and more established, competitors such as British Airways.
PROTECTING MARKET SHORE
PRODUCT DEVELOPMENT
This is sometimes referred to as a continuous innovation strategy, the intention of which is to protect or develop market share by the use of product modifications and enhancement. An example of this was the introduction of Pampers diapers, made especially for male and female infants. Further product development, by Proctor and Gamble, resulted in the introduction of higher absorbency diapers that offered enhanced benefits to mothers and users alike. This commitment to product refinement has more recently resulted in a response to calls from environmentalists charging diaper manufacturers with excessive wastage, i.e. demands are being made for the recycled diaper.
A CONTINUOUS INNOVATION STRATEGY PROTECTS OR DEVELOPS MARKET SHARE
It is often the case, therefore, that a good product, with attractive features, sustains market advantage by carefully incorporating modifications that develop both utility and function. For example, the Pentax Zoom camera started with a 70mm zoom lens and progressed to 90mm and 105mm lenses. A variegated model is currently being marketed for outdoor use in wet conditions.
MARKET CHALLENGER STRATEGIES
PRODUCT PROLIFERATION STRATEGY
This is similar to a product development strategy. Here the emphasis is not necessarily on technological leadership, but on the diversity of product models produced by the company. Seiko have approximately 3,000 watch designs in their catalogues. In a retail context, this diversity would take up a considerable amount of counter space in a jewellery or department store. Another good example is provided by the Sony Corporation who market dozens of models of the Walkman, ranging from "My First Walkman" for children which is a brightly coloured, easy-to-use, fun model, to the "Professional Walkman", which sports numerous features that reflect the technical wizardry of the manufacturer.
DIVERSIFICATION
This term, in fact, is an umbrella phrase for what could be three different strategies: concentric diversification, horizontal diversification, and conglomerate diversification. Diversification has the primary objective of reducing risk by moving into new areas that afford good growth opportunities, better profit prospects and greater levels of certainty. Such a strategy is commonly adopted in a "cash cow" situation when there is reason to believe that the golden days of profitability are gone for good.
PRODUCT DIVERSIFICATION
Product diversification may sometimes be referred to as concentric diversification. This requires a firm to develop, or acquire, new products which have market or technological synergies with current products. These products may, or may not, be intended for sale to the company's present markets. In this way, the firm derives the accumulated benefits of experience and knowledge, thereby reinforcing Peters and Waterman's advice to, "stick to the knitting". An example of this was provided by Philip Morris's purchase of Miller Brewing. Beer and cigarettes are distributed through similar, if not identical, outlets; consequently, Philip Morris was able to utilize much of its existing knowledge and marketing intelligence concerning customer profiles. Another example of concentric diversification is provided by the 3M corporation. Its strengths in abrasives technology have given rise to products ranging from industrial rubbing compounds to household items such as pot scourers.
HORIZONTAL DIVERSIFICATION
The firm adds new products that could appeal to existing clients, e.g. a producer of sunglasses distributing tanning lotion, or a pizza home-delivery company offering home rental videos.
CONGLOMERATE DIVERSIFICATION
The adding of products or businesses that have no relation to current technologies, products or markets. The Mitsubishi Corporation manufactures an immense range of products, ranging from disposable ballpoint pens to bulk carriers. There is considerable debate about the desirability of conglomeration and this is understandable in the light of the hard experience of some companies. A case in point would be the Coca Cola Corporation which, during the 1980s, diversified into the wine industry, desalination plants, and the movie business, only to discover, in a relatively short space of time, that they had over-reached their corporate capabilities by straying from their core business.
INTEGRATION
Commonly confused with diversification, integration relates more precisely to the vertical aspects of manufacturing and distribution logistics. Integration generally takes four forms: backward, forward, horizontal, and perfect integration.
BACKWARD INTEGRATION
If a company were to undertake a strategy of backward integration, investment would result in the acquisition of vendors--for example, 7-Up purchasing their flavour supplier, and Japanese car manufacturers buying into component part makers. However, in the case of General Motors, this very same strategy was one of the factors contributing to the company's lack of competitiveness.
SOME ORGANIZATIONS HAVE ACTIVELY RESISTED TEMPTATION...
The explanation was that the sourcing of parts from within the General Motors group of companies failed to produce both quality and price advantages that could have been secured if they had opened up their procurement practices to international vendors. Some organizations have actively resisted the temptation to backwardly integrate, e.g. McDonalds, who maintain strong buying leverage by remaining independent of their numerous suppliers.
FORWARD INTEGRATION
This strategy usually involves the movement into logistical, distributive, or retailing activities--for example, Firestone's investment in tyre service centres. The Korean furniture manufacturer, BIF, has also pursued a strategy of forward integration through investment in its own retailing operations to complement both its design and production capabilities.
HORIZONTAL INTEGRATION
A pure form of growth, horizontal integration encourages ownership or control of other firms in the industry. For example, horizontal integration was witnessed in the 1980s when a number of European and American producers of automobiles purchased producers of high-end or exotic cars--e.g. Ford's acquisition of Jaguar, and Fiat's acquisition of Ferrari.
PERFECT INTEGRATION
Some very large and complex industries are comprised of major players that are perfectly integrated. An example is provided by the multinational oil companies which have evolved from exploration, refinement and conversion, to downstream distributors and marketers of a massive range of products. Companies like Exxon and Shell own everything from oil wells through to retail petrol stations. This has provided them with formidable marketing strengths.
MARKET SPECIALIZATION STRATEGIES FOCUS STRATEGY
This is more commonly known as specialization and denotes a company that focuses its efforts on serving a few markets. Usually specialization involves a technology base that has restricted product and market applications. Such an example is the focus strategy, as undertaken by the West Australian company, Solarhart, that specializes in solar energy equipment for domestic, residential, and industrial properties. Solarhart is not concerned with developing products powered by more conventional energy sources.
NICHE MARKETING
This is a highly specialized strategy, where the firm concentrates on one narrowly defined, but profitable, market. Dr Scholl, the manufacturer of foot-care products, illustrates the beauty of good nichemanship. The attractiveness is that a good nicher can make the brand synonymous with the generic product and, in the best examples, their influence over the marketplace becomes almost "competition proof". Can you name a competitor for Dr Scholl or Tabasco sauce?
CONCLUSION
In life, we experience numerous opportunities to take alternative courses of action, each decision leading in a direction that we hope will be successful. Many of the decisions are, of course, mutually exclusive. For example, it is unlikely that we would want to attend two business schools simultaneously. More normally, we would want to decide which one was most suitable in terms of facilitating the achievement of personal objectives.
STRATEGIC MARKETING CONCERNS ITSELF WITH OPTIMAL SOLUTIONS
In business organizations we are faced with similar decisions. Some of these decisions are imposed on us by external forces, others reflect decisions that are derived more proactively as we strive for greater profit, power, or prominence. All too often, however, managers do not make strategic decisons; rather, they sit on the fence and allow themselves to be buffeted by changing market influences. Reluctance to make strategic business decisions stems from a number of factors that are both organizational and personal in origin. What are the personal factors? For these factors are at least in our arena of control. Primarily, personal factors revolve around a lack of knowledge, experience or confidence in the strategic planning process. The strategic decision-making frameworks that we have been exposed to in the past may have looked intimidatingly complex, too theoretical, or prone to problems in their application and have, consequently, not been heavily utilized by potential practitioners.
Strategic decision making is not about the pursuit of the "best way". This is elusive, if indeed a "best way" actually exists at all. Executives have to take decisions, confronted by particular sets of internal constraints and external market conditions. It is more accurate, therefore, to look on strategic marketing as concerning itself with optimal solutions that appear to offer reasonable prospect of quantifiable returns, given certain circumstances.
This article has attempted to lift the veil surrounding the complexities that shadow strategic planning and to provide managers with an insight into the current terminology and the strategic alternatives which are available. The review is by no means extensive, but it is hoped that, by removing an element of confusion, managers will be in a better position to consider a more sophisticated approach to strategic planning.
REFERENCES
1. Goldsmith, W., and Clutterbuck, D., The Winning Streak, Penguin, London, 1988.
2. Emery, A., in Kotler. P. and Singh, R., The Great Marketing Wars, Prentice-Hall International, Englewood Cliffs, NJ, 1984.
3. Enis, B., in Kotler, P. and Singh, R., The Great Marketing Wars, Prentice-Hall International, Englewood Cliffs, NJ. 1984.
FURTHER READING
Jain, S., Marketing Planning and Strategy, (third ed.), Thomson Publishing Group, Dundee, 1990.
Kotler, P., Marketing Management: Analysis, Planning and Control, (seventh ed.), Prentice-Hall International, Englewood Cliffs, NJ, 1991.
Gael McDonald is an Associate Professor of Asia Pacific International; Christopher Roberts is the Director of Conceptual Marketing Consultancy, Hong Kong.
Indexing (document details)
Subjects:
Strategic planning, Objectives, Niche marketing, Market strategy, Market shares
Classification Codes
2310
Author(s):
McDonald, Gael, Roberts, Christopher
Publication title:
Management Decision. London: 1992. Vol. 30, Iss. 7; pg. 54, 7 pgs
Source type:
Periodical
ISSN:
00251747
ProQuest document ID:
603482
Text Word Count
4300
Document URL:
http://proquest.umi.com/pqdweb?did=603482&Fmt=3&clientId=66959&RQT=309&VName=PQD
Copyright © 2007 ProQuest-CSA LLC. All rights reserved. Terms & Conditions
Abstract (Summary)
Strategic planning is surrounded by a veil of complexity that many are unable to penetrate. The terminology outlining strategic options can be confusingly repetitive. The tools, options, and current buzzwords used in marketing strategy are reviewed in an effort to lift the veil of complexity surrounding marketing strategy. Conceptual tools used in the strategic planning process include: 1. business portfolio analysis, 2. the Boston Consulting Group (BCG) Growth Share Matrix, 3. company life cycle patterns, and 4. the new BCG Matrix. Corporate strategies may be classified under 4 broad headings: 1. stability, 2. growth, 3. retrenchment, and 4. combination. Market leader strategies include market penetration, market development, differentiation, and cost leadership. Market challenger strategies include product proliferation, diversification, and integration. Focus strategy and niche marketing are market specialization strategies.
Full Text (4300 words)
Copyright MCB University Press Limited 1992
Reading three texts on strategic marketing is rather like asking ten different economists for a definition of economics. One receives ten different answers and a distinct impression that one would have been better off not asking the question in the first place. Similarly, reading three texts on strategic marketing may be worse than reading one. For a start, the terminology gets confusing; what is referred to as diversification in one text may well be called integration in another. If that is not clear, then start to wrestle with the fact that integration strategies may be delineated between vertical, backward, and lateral alternatives. Given expressions such as by-pass attack, pre-emptive defence, counter-offensive and mobile defence, is it any wonder that marketers feel they are indulging in some form of martial arts, rather than making meaningful decisions about the future plans and investments of their organizations?
So, why has all the confusion arisen? Initially, it should be realized that many of the analytic and conceptual tools used in strategic marketing planning, such as the General Electric Multi-Factor Portfolio Matrix, and the Boston Consulting Group Growth Share Matrix, are exactly that --conceptual tools. These tools were developed to assist marketers in analysing the market situation; they do not provide strategic solutions, beyond a general level, to a particular problem. For example, having used the Growth Share matrix and identified a product as a "dog"--that is, a product or division that occupies relatively low market share in a low growth market--such categorization, whilst informative from a strategic viewpoint, is of little help in formulating a strategic response. Marketing strategy, however, demands that marketers go beyond preliminary analysis and formulate a detailed strategic response that is appropriate in a given market situation. In the case of the "dog" product, the appropriate strategic response would likely be divestment.
Much of the language used in strategic marketing is descriptive. For example, the General Electric matrix offers alternative general descriptions for companies in positions of relative competitive strength or weakness. This grid plots strategic position against measures of industry attractiveness and business strengths, projecting three general alternatives: to invest, selectively manage, or divest. However, this diagnosis is of limited value in that it does not address the issue of how the three strategic alternatives are to be implemented. Frequently, little reference is given to the practicalities of how a strategy is to be achieved, or illustrations of how a strategy has been successfully actualized in the past. Descriptions, therefore, act as guidelines that indicate general alternatives, but no more. They do not offer the finer detail of a tactical solution and therein lie their principal limitations.
A further difficulty with strategic formulation is that it is difficult to extrapolate the experience of one firm, in that circumstances are very idiosyncratic. What suits one company in a given situation may poorly serve another. Indeed, companies engaged in the same marketplace, and in possession of similar market intelligence, may devise strategic prescriptions that are fundamentally different. For example, in the tyre business a massive volume, low-cost strategy was selected by Goodyear. A strong production emphasis generated significant manufacturing economies and a strategy of marketplace cost leadership. In contrast, the French tyre manufacturer Michelin, with an emphasis on research and development, chose the new technology route and pioneered the radial tyre which redefined customer needs and eventually rendered the cross-ply tyre obsolete. Interestingly, Dunlop's technical director dispensed with the radial tyre by declaring it a "marketing gimmick" 1, p. 154!. The technology leadership strategy of Michelin is, however, removed from the specialist application strategy adopted by Armstrong Rubber, an American manufacturer that concentrates on the production of tyres for the aviation, agricultural, and civil engineering industries. The focused strategy used by Armstrong provides a profitable alternative approach to engaging in direct competition with global heavyweights in the tyre industry.
MARKETING IS MERELY A CIVILIZED FORM OF WARFARE
Marketing is merely a civilized form of warfare, in which most battles are won with words, ideas, and disciplined thinking 2, p. 3!, supplemented with generous portions of creativity. For one player, this combination may yield a strategic formulation that is a virtual inversion of a close competitor's strategy. In the civil airframe business, in the 1960s, European manufacturers opted for the high-tech solution with Concorde, whereas the American manufacturer, Boeing, chose to build on existing technology and develop a large capacity aircraft for the mass market, the B747. The two strategies are akin to the tortoise and the hare, in this case the tortoise won. The B747 has been operational for 22 years and it is, arguably, the world's most successful civil aircraft. Concorde has been operational for 16 years and less than a dozen planes are in service.
It has been said, "Define your terms and we shall talk" but, then again, all definitions may be dangerous. This sort of dilemma is, without doubt, a source of confusion in strategic planning; the nomenclature is almost intimidating. Guerrilla, by-pass attack, and mobile defence strategies make marketing sound as if it were extracted from the curriculum of a military academy. The analogy between military and marketing strategy has some value, but it is imperfect. The similarities are obvious. Beat the enemy (competitors) to gain territory (customers). However, the objectives of military and marketing strategy are different. Marketing creates value and enhances product utility, warfare merely transfers value and is often destructive of life and property 3, p. 37!. The terminology outlining strategic options can also be confusingly repetitive. A strategic option may be justified by a company in a market-leader position and, similarly, by one in a market-follower position. Consequently, the same strategy reappears but under a different set of circumstances, one sometimes it is renamed by enthusiastic academics attempting to undertake their own form of differentiation. So what alternatives are available to the marketing strategist? The following provides a brief review of the tools, options and the current "buzz" words used in the combat zone of marketing strategy.
CONCEPTUAL TOOLS IN STRATEGIC PLANNING
The conceptual tools used in the strategic planning process are not strategies in themselves; rather they are the means by which management may evaluate the strategic business units that constitute the company.
BUSINESS PORTFOLIO ANALYSIS
This identifies the strategic business units that make up the company and attempts to evaluate current effectiveness and vulnerabilities. A strategic business unit is any unit in the organization with its own mission, objectives and planning autonomy.
BOSTON CONSULTING GROUP GROWTH SHARE MATRIX
Assists marketers to identify high and low potential business units or products. This two-by-two matrix has, on the vertical axis, market growth rate, which provides a measure of market attractiveness and, on the horizontal axis, market share relative to the largest competitor, which serves as a measure of company strength in the market.
DEFINITIONS MAY BE DANGEROUS THE NOMENCLATURE IS ALMOST INTIMIDATING
Four categories are depicted in this matrix, briefly they are:
(1) Cash cows (low growth, high market share) produce large amounts of cash but future growth is limited. A harvest strategy is usually recommended, in that the organization is advised to reap whatever they can but not to resow the seed. Too many cash cows may indicate a degree of complacency on the part of the company. Exceptions are naturally to be found and McDonalds, in the United States, is a good example of a leader in a cash-cow market that is still heavily investing in new technologies and products designed to maintain market share and defend a dominant position.
(2) Sirs (high growth, high market share) are products that produce large amounts of cash in a fast-growing market, in which they hold a dominant share. An example of a star is the "Post It" produced by 3M. Clearly an investment and growth strategy is recommended, particularly as the direct competition for this brand is weak.
(3) Question marks (high growth, low market share) exist under higher risk circumstances, in that the products are profitable but only manage to secure a small share of the total market. Commonly, a build strategy is recommended although rapid growth may attract the attentions of the "big guns" who may convert a highly profitable niche into a fully-fledged segment of large volume, thereby frustrating the endeavours of lesser firms. The "big guns" frequently possess greater production and marketing economies, which make it difficult for a smaller competitor to gain market share.
(4) Dogs (low growth, low market share). Because of the limited share size and low growth, products or strategic business units which are "dogs" do not generate much revenue. A typical strategy would be to divest by selling off the "dogs" in order to release money to support the "question marks".
COMPANY LIFE CYCLE PATTERNS
Company life-cycle patterns classify businesses into embryonic, growth, maturity, and decline stages. Utilizing the distinctions of market growth and market share, the model has some parallels with the Boston Consulting Group Matrix.
THE NEW BCG MATRIX
Updating the original matrix, the revised BCG matrix maintains that a company has to achieve a competitive advantage to enjoy sustained profitability, and that the means for achieving such advantage are conditioned by the way in which industries evolve.
A COMPANY HAS TO ACHIEVE COMPETITIVE ADVANTAGE
The two-by-two matrix employs distinctions of size, and the number of ways to achieve competitive advantage, yielding four industry classifications:
(1) Stalemate--few ways, small size. this implies limited means to obtain an advantage and the advantage, when obtained, is small.
(2) Volume--few ways, large size. There are only a few means to obtain an advantage but, if obtained it generates high volume.
(3) Specialization many ways, large size. There are several alternative ways to derive an advantage and, once obtained, it is large.
(4) Fragmentation many ways, small size. There are many ways to obtain an advantage, but the advantage is minimal.
BASIC STRATEGIC OPTIONS
From this examination of some of the tools associated with strategic planning, it is now appropriate to review options. Corporate strategies may be classified under four broad headings:
STABILITY
This strategy occurs when an organization achieves a satisfactory performance under stable market conditions. The usual practices engaged in to achieve stability involve the maintenance of market share and return on investment through better serving existing client groups. In mature marketplaces, demonstrating low or no growth, marketers are expected to execute their strategic plans more incisively. Under these conditions, stability could be achieved through intensive distribution, thereby enhancing convenience and levels of service, or by rejuvenating the brand by adjusting its image or packaging.
GROWTH
A growth strategy is usually formulated in the wake of establishing developmental goals that seek to take advantage of perceived market opportunities. When discussing growth strategies, it is common to hear suggestions of physical expansion, acquisitions, mergers and diversification. Growth strategies could be precipitated by the combined efforts of competitors to expand aggregate demand, or by one company that secures a larger slice of the pie as a direct consequence of its strategy, e.g. softening prices.
RETRENCHMENT
Retrenchment is a common strategic response in markers that are subject to adverse economic pressures, uncertainty, or cheap foreign competition. Retrenchment can be differentiated from divestment, in that the former is a reaction to temporary hardships whereas divestment has the element of permanency about it.
COMBINATION
A combination strategy refers to the pursuit of different strategies in separate strategic business units. The combination approach suggests that in multi-division, multi-product companies there might not be a unifying strategy that serves the best interests of all divisions. Different geographic, customer, or competitive variables necessitate more individualistic solutions, that operate concurrently within the corporate framework. Having said this, though, it is usual to expect strategic business unit approaches to be consistent with established corporate designs, i.e. the mission statement and group policies.
Inevitably, these four strategies are frequently viewed as being too generalized to be of any practical use and, therefore, more precise strategic formulations are necessary to direct action in a specific sense. Let us examine the category of "growth strategies" because, invariably, this category generates the greater number of suggestions. These strategies are, to a large extent, dependent upon market position leader, challenger, follower, nicher.
MARKET LEADER STRATEGIES EXPANDING MARKET SHARE
It should be noted that these strategies are not the monopoly of market leaders; however, it is common to observe the following strategic practices among leaders.
MARKET PENETRATION
The main task here is to increase sales by encouraging wider usage of existing products by existing customers --for example, this could be achieved in the market for sunglasses by promoting the product as a fashion accessory. Increased frequency could be achieved by suggesting two applications of floor wax rather than one, or by formulating an extra-mild shampoo with the directive to consumers to wash their hair every day, e.g. Timotei shampoo produced by Elida Gibbs. Years ago, Wrigley's chewing gum successfully implemented this strategy with their advertisements for pellet-form chewing gum. The advertisements depicted an open hand receiving not one but two pellets of gum from a generous friend, thus creating future behavioural expectations of two pieces rather than one.
MARKET DEVELOPMENT
The entering of new markets could involve expansion into new geographic areas, both local and foreign, a shift from consumer to industrial markets or, possibly, marketing the product or service to new segments or demographic groups. An instance of the latter was provided by the banks which once perceived their role to be servicing commercial clients. Subsequently, they initiated concerted efforts to attract school leavers, students and new graduate depositors. Targeting these new demographic groups has provided new market development opportunities. More recently, high net worth customers have become the focus of many banks. New uses were extensively created by Hallmark cards, who regard themselves as being in the "social greetings business". A casual glance at their product range demonstrates a large variety of circumstances in which a card could be purchased, e.g. secretaries' day, pets' day, and congratulations on your divorce! In response to a decline in home baking, and with the advent of cake mixes, Arm & Hammer, makers of baking soda, promoted the use of their product not only as an ingredient for baking, but as a deodorizer for use in the refrigerator as well.
DIFFERENTIATION
With a strategy of differentiation the product itself may not be altered, or improved in some way. While reformulation is a possibility, it may well be that emphasis is placed on product positioning efforts and the attendant perceptions of consumers. One brand of tomato ketchup is very much like another, with the exception of the way in which it is perceived by consumers in relation to competing brands. The liquor industry utilizes image concept differentiation strategies and the successful marketing of whisky is strongly dependent upon establishing distinctive positioning, e.g. Chivas Regal.
ATTENTION NEEDS TO BE GIVEN TO THE COMMUNICATIONS MIX
Successful differentiation frequently confers higher perceived value or status, which enables marketers to price up, command a prominent market position, and enjoy superior profits. With this strategy a lot more attention needs to be given to the communications mix and the way in which it contributes to a brand's perceptual development among target consumers. Beecham's successfully implemented this strategy with Lucozade. Without changing the product formula, Beecham's, with a little help from Daley Thompson, were able to reposition the brand as an energy/sports drink as opposed to a beverage for invalids and convalescing children.
COST LEADERSHIP
This alternative is often used as a counter-offensive strategy, in that the company attempts to achieve the lowest costs of production and distribution to price lower than its competitors, thereby winning market share. Texas Instruments is a commonly quoted example of a high-tech manufacturer that concentrates its efforts on improved efficiencies, enhanced technology, and production volumes, as the means for driving costs down. Lower costs are passed on to the consumer in the form of lower prices, thereby making Texas Instruments highly competitive in world markets. Likewise, McDonald's pursuit of value for money constantly drives the company to seek newer and better ways to achieve greater economies and cost reductions. Virgin Atlantic's pricing on the North Atlantic route is another prominent example of a cost leadership strategy that successfully drew business away from considerably larger, and more established, competitors such as British Airways.
PROTECTING MARKET SHORE
PRODUCT DEVELOPMENT
This is sometimes referred to as a continuous innovation strategy, the intention of which is to protect or develop market share by the use of product modifications and enhancement. An example of this was the introduction of Pampers diapers, made especially for male and female infants. Further product development, by Proctor and Gamble, resulted in the introduction of higher absorbency diapers that offered enhanced benefits to mothers and users alike. This commitment to product refinement has more recently resulted in a response to calls from environmentalists charging diaper manufacturers with excessive wastage, i.e. demands are being made for the recycled diaper.
A CONTINUOUS INNOVATION STRATEGY PROTECTS OR DEVELOPS MARKET SHARE
It is often the case, therefore, that a good product, with attractive features, sustains market advantage by carefully incorporating modifications that develop both utility and function. For example, the Pentax Zoom camera started with a 70mm zoom lens and progressed to 90mm and 105mm lenses. A variegated model is currently being marketed for outdoor use in wet conditions.
MARKET CHALLENGER STRATEGIES
PRODUCT PROLIFERATION STRATEGY
This is similar to a product development strategy. Here the emphasis is not necessarily on technological leadership, but on the diversity of product models produced by the company. Seiko have approximately 3,000 watch designs in their catalogues. In a retail context, this diversity would take up a considerable amount of counter space in a jewellery or department store. Another good example is provided by the Sony Corporation who market dozens of models of the Walkman, ranging from "My First Walkman" for children which is a brightly coloured, easy-to-use, fun model, to the "Professional Walkman", which sports numerous features that reflect the technical wizardry of the manufacturer.
DIVERSIFICATION
This term, in fact, is an umbrella phrase for what could be three different strategies: concentric diversification, horizontal diversification, and conglomerate diversification. Diversification has the primary objective of reducing risk by moving into new areas that afford good growth opportunities, better profit prospects and greater levels of certainty. Such a strategy is commonly adopted in a "cash cow" situation when there is reason to believe that the golden days of profitability are gone for good.
PRODUCT DIVERSIFICATION
Product diversification may sometimes be referred to as concentric diversification. This requires a firm to develop, or acquire, new products which have market or technological synergies with current products. These products may, or may not, be intended for sale to the company's present markets. In this way, the firm derives the accumulated benefits of experience and knowledge, thereby reinforcing Peters and Waterman's advice to, "stick to the knitting". An example of this was provided by Philip Morris's purchase of Miller Brewing. Beer and cigarettes are distributed through similar, if not identical, outlets; consequently, Philip Morris was able to utilize much of its existing knowledge and marketing intelligence concerning customer profiles. Another example of concentric diversification is provided by the 3M corporation. Its strengths in abrasives technology have given rise to products ranging from industrial rubbing compounds to household items such as pot scourers.
HORIZONTAL DIVERSIFICATION
The firm adds new products that could appeal to existing clients, e.g. a producer of sunglasses distributing tanning lotion, or a pizza home-delivery company offering home rental videos.
CONGLOMERATE DIVERSIFICATION
The adding of products or businesses that have no relation to current technologies, products or markets. The Mitsubishi Corporation manufactures an immense range of products, ranging from disposable ballpoint pens to bulk carriers. There is considerable debate about the desirability of conglomeration and this is understandable in the light of the hard experience of some companies. A case in point would be the Coca Cola Corporation which, during the 1980s, diversified into the wine industry, desalination plants, and the movie business, only to discover, in a relatively short space of time, that they had over-reached their corporate capabilities by straying from their core business.
INTEGRATION
Commonly confused with diversification, integration relates more precisely to the vertical aspects of manufacturing and distribution logistics. Integration generally takes four forms: backward, forward, horizontal, and perfect integration.
BACKWARD INTEGRATION
If a company were to undertake a strategy of backward integration, investment would result in the acquisition of vendors--for example, 7-Up purchasing their flavour supplier, and Japanese car manufacturers buying into component part makers. However, in the case of General Motors, this very same strategy was one of the factors contributing to the company's lack of competitiveness.
SOME ORGANIZATIONS HAVE ACTIVELY RESISTED TEMPTATION...
The explanation was that the sourcing of parts from within the General Motors group of companies failed to produce both quality and price advantages that could have been secured if they had opened up their procurement practices to international vendors. Some organizations have actively resisted the temptation to backwardly integrate, e.g. McDonalds, who maintain strong buying leverage by remaining independent of their numerous suppliers.
FORWARD INTEGRATION
This strategy usually involves the movement into logistical, distributive, or retailing activities--for example, Firestone's investment in tyre service centres. The Korean furniture manufacturer, BIF, has also pursued a strategy of forward integration through investment in its own retailing operations to complement both its design and production capabilities.
HORIZONTAL INTEGRATION
A pure form of growth, horizontal integration encourages ownership or control of other firms in the industry. For example, horizontal integration was witnessed in the 1980s when a number of European and American producers of automobiles purchased producers of high-end or exotic cars--e.g. Ford's acquisition of Jaguar, and Fiat's acquisition of Ferrari.
PERFECT INTEGRATION
Some very large and complex industries are comprised of major players that are perfectly integrated. An example is provided by the multinational oil companies which have evolved from exploration, refinement and conversion, to downstream distributors and marketers of a massive range of products. Companies like Exxon and Shell own everything from oil wells through to retail petrol stations. This has provided them with formidable marketing strengths.
MARKET SPECIALIZATION STRATEGIES FOCUS STRATEGY
This is more commonly known as specialization and denotes a company that focuses its efforts on serving a few markets. Usually specialization involves a technology base that has restricted product and market applications. Such an example is the focus strategy, as undertaken by the West Australian company, Solarhart, that specializes in solar energy equipment for domestic, residential, and industrial properties. Solarhart is not concerned with developing products powered by more conventional energy sources.
NICHE MARKETING
This is a highly specialized strategy, where the firm concentrates on one narrowly defined, but profitable, market. Dr Scholl, the manufacturer of foot-care products, illustrates the beauty of good nichemanship. The attractiveness is that a good nicher can make the brand synonymous with the generic product and, in the best examples, their influence over the marketplace becomes almost "competition proof". Can you name a competitor for Dr Scholl or Tabasco sauce?
CONCLUSION
In life, we experience numerous opportunities to take alternative courses of action, each decision leading in a direction that we hope will be successful. Many of the decisions are, of course, mutually exclusive. For example, it is unlikely that we would want to attend two business schools simultaneously. More normally, we would want to decide which one was most suitable in terms of facilitating the achievement of personal objectives.
STRATEGIC MARKETING CONCERNS ITSELF WITH OPTIMAL SOLUTIONS
In business organizations we are faced with similar decisions. Some of these decisions are imposed on us by external forces, others reflect decisions that are derived more proactively as we strive for greater profit, power, or prominence. All too often, however, managers do not make strategic decisons; rather, they sit on the fence and allow themselves to be buffeted by changing market influences. Reluctance to make strategic business decisions stems from a number of factors that are both organizational and personal in origin. What are the personal factors? For these factors are at least in our arena of control. Primarily, personal factors revolve around a lack of knowledge, experience or confidence in the strategic planning process. The strategic decision-making frameworks that we have been exposed to in the past may have looked intimidatingly complex, too theoretical, or prone to problems in their application and have, consequently, not been heavily utilized by potential practitioners.
Strategic decision making is not about the pursuit of the "best way". This is elusive, if indeed a "best way" actually exists at all. Executives have to take decisions, confronted by particular sets of internal constraints and external market conditions. It is more accurate, therefore, to look on strategic marketing as concerning itself with optimal solutions that appear to offer reasonable prospect of quantifiable returns, given certain circumstances.
This article has attempted to lift the veil surrounding the complexities that shadow strategic planning and to provide managers with an insight into the current terminology and the strategic alternatives which are available. The review is by no means extensive, but it is hoped that, by removing an element of confusion, managers will be in a better position to consider a more sophisticated approach to strategic planning.
REFERENCES
1. Goldsmith, W., and Clutterbuck, D., The Winning Streak, Penguin, London, 1988.
2. Emery, A., in Kotler. P. and Singh, R., The Great Marketing Wars, Prentice-Hall International, Englewood Cliffs, NJ, 1984.
3. Enis, B., in Kotler, P. and Singh, R., The Great Marketing Wars, Prentice-Hall International, Englewood Cliffs, NJ. 1984.
FURTHER READING
Jain, S., Marketing Planning and Strategy, (third ed.), Thomson Publishing Group, Dundee, 1990.
Kotler, P., Marketing Management: Analysis, Planning and Control, (seventh ed.), Prentice-Hall International, Englewood Cliffs, NJ, 1991.
Gael McDonald is an Associate Professor of Asia Pacific International; Christopher Roberts is the Director of Conceptual Marketing Consultancy, Hong Kong.
Indexing (document details)
Subjects:
Strategic planning, Objectives, Niche marketing, Market strategy, Market shares
Classification Codes
2310
Author(s):
McDonald, Gael, Roberts, Christopher
Publication title:
Management Decision. London: 1992. Vol. 30, Iss. 7; pg. 54, 7 pgs
Source type:
Periodical
ISSN:
00251747
ProQuest document ID:
603482
Text Word Count
4300
Document URL:
http://proquest.umi.com/pqdweb?did=603482&Fmt=3&clientId=66959&RQT=309&VName=PQD
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