Transcript Organizational fit

Chapter 12
Organizing and Planning for
Effective Implementation
2
Chapter Overview
1.
Aspects of a Strategic Fit
2.
Factors Related to the Successful Implementation of Business Strategies
3.
Contents of an Annual Marketing Plan
4.
Annual Marketing Plan
Aspects of a Strategic Fit
• Competitive and marketing strategies must fit:
– Needs and desires of its target customers
– Competitive and technological realities of the marketplace
Aspects of a Strategic Fit
• Organizational fit: Fit between a business’s competitive and
marketing strategies and:
– Organizational structures, policies, processes
– Plans necessary to effectively implement those strategies
Exhibit 12.1 Administrative Factors Related to the
Successful Implementation of Business Strategies
Factors Related to the Successful Implementation of
Business Strategies
•
•
•
•
•
Functional competencies of the SBU
Resource allocation across functions
Decision-making influence and participation
SBU’s organizational structure
Functional coordination and conflict resolution
Exhibit 12.2 – Organizational and Interfunctional Factors Related to
the Successful Implementation of Business Strategies
Types of Business Strategy
Organizational Factor
Prospector
Differentiated Defender
Low-Cost Defender
Functional
competencies of the
SBU
SBU will perform best on critical
volume and share-growth
dimensions when its functional
strengths include marketing, sales,
product R&D, and engineering.
SBU will perform best on critical ROI
dimensions when its functional strengths
include sales, financial management and
control, and those functions related to its
differential advantage
(e.g., marketing, product R&D)
SBU will perform best on critical ROI and
cash flow dimensions when its functional
strengths include process engineering,
production, distribution, and financial
management and control.
Resource allocation
across functions
SBU will perform best on volume
and share-growth dimensions
when percentage of sales spent on
marketing, sales, and product R&D
are high and when gross fixed
assets per employee and percent
of capacity utilization are low
relative to competitors’.
SBU will perform best on the ROI
dimension when percentage of sales
spent on the salesforce, gross fixed
assets per employee, percent of capacity
utilization, and percentage of sales
devoted to other functions related to the
SBU’s differential advantage are high
relative to competitors’.
SBU will perform best on ROI and cash
flow dimensions when marketing, sales,
and product R&D expenses are low, but
process R&D, fixed assets per employee,
and percentage of capacity utilization are
high relative to competitors’.
Exhibit 12.2 – Organizational and Interfunctional Factors Related to
the Successful Implementation of Business Strategies
Decision-making
influence and
participation
SBU will perform best on volume and
share-growth dimensions when
managers from marketing, sales,
product R&D, and engineering have
substantial influence on unit’s business
and marketing strategy decision.
SBU will perform best on ROI
dimension when financial managers,
controller, and managers of functions
related to unit’s differential advantage
have substantial influence on business
and marketing strategy decision.
SBU will perform best on ROI and cash
flow when controller, financial, and
production managers have substantial
influence on business and marketing
strategy decision.
SBU’s
organizational
structure
SBU will perform best on volume and
share-growth dimensions when
structure has low levels of formalization
and centralization, but a high level of
specialization.
SBU will perform best on ROI
dimension when structure has
moderate levels of formalization,
centralization, and specialization.
SBU will perform best on ROI and cash
flow dimensions when structure has
high levels of formalization and
centralization, but a low level of
specialization.
Functional
coordination and
conflict
resolution
SBU will experience high levels of
interfunctional conflict; SBU will perform
best on volume and share-growth
dimensions when participative
SBU will experience moderate levels of
interfunctional conflict; SBU will perform
best on ROI dimension when resolution
is participative for issues related to
differential advantage, but hierarchical
for others
(e.g., product managers, product
improvement teams, etc.).
SBU will experience low levels of
interfunctional conflict; SBU will perform
best on ROI and cash flow dimensions
when conflict resolution mechanisms
are hierarchical
(e.g., functional organization).
Variables in Organizational Structures
• Formalization: Degree to which formal rules and standard policies
and procedures govern decisions and working relationships
• Centralization: Location of decision authority and control within an
organization’s hierarchy
• Specialization: Division of tasks and activities across positions
within organizational unit
Organizational Structures
• Adaptiveness and innovativeness are enhanced when:
– Decision-making authority is decentralized
– Managerial discretion and informal coordination mechanisms replace rigid
rules and policies
– More specialists are present
Functional Organizations
• Simplest and most bureaucratic
• Heavy reliance on standard rules and operating procedures
• Conflicts are resolved in a hierarchical manner
Exhibit 12.4 - Functional Organization of a SBU and
Its Marketing Department
Product Management Organizations
• Decentralizes decision making
• Must rely on persuasion and compromise
• Improved coordination of functional activities within and across
product-markets, and increased attention to smaller product-market
entries
Exhibit 12.5 - A Marketing Department with a Product
Management Organization
Market Management Organizations
• Manager has overall responsibility for:
– Planning and implementing a national marketing program for the product
• Popular with consumer goods companies
Matrix Organizations
• Least bureaucratic or centralized
• Brings together different types of specialists in a participative
coordination structure
• Inefficient participative decision making
Exhibit 12.6 - A Marketing Department with a Market Management
Organization
Trends in Organizational Design
• Increased emphasis on managing business processes
• Increased use of self-managing teams
• Using teams as the basis for collaborative networks
Organizational Adjustments
• Key drivers
–
–
–
–
–
Customer needs
Informational requirements of the sales and marketing personnel
Ability to motivate and coordinate activities according to market conditions
Available competencies and resources
Costs
Organizational Designs for Selling in Global Markets
• Little or no formal organization
– Structure ranges from the domestic organization handling international
transactions to a separate export department
• An international division
– House all international activities that relate to marketing
Organizational Designs for Selling in Global Markets
• Global structures
– Variety of global types
• Simplest replicates the firm’s basic functional departments
• Decision making and organizational structure
– Organizational structures can be centralized or decentralized in terms of
decision making
Exhibit 12.8 Contents of an Annual Marketing Plan
Section
•
Executive summary
Content
Present a short overview of the issues, objectives, strategy, and actions incorporated in the plan and their expected
outcomes for quick management review.
•
Current situation and
trends
Summarizes relevant background information on the market, competition and the macroenvironment, and trends
therein, including size and growth rates for the overall market and key segments.
•
Performance review
(for and existing
product or service only)
•
Key issues
Examines the past performance of the product and the elements of its marketing program
(e.g., distribution, promotion, etc.).
Identifies the main opportunities and threats to the product that the plan must deal with in the coming year and the
relative strengths and weaknesses of the product and business unit that must be taken into account in facing those
issue.
•
Objectives
Specifies the goals to be accomplished in terms of sales volume, market share, and profit
•
Marketing strategy
Summarizes the overall strategic approach that will be used to meet the plan’s objective.
Section
•
Action plans
Content
This is the most critical section of the annual plan for helping to ensure effective implementation and and
coordination of activities across functional departments. It specifies:
• The target market to be pursued.
• What specific actions are to be taken with respect to each of the 4 Ps.
• Who is responsible for each action.
• When the action will be engaged in.
• How much will be budgeted for each action.
•
Projected profit-andloss statement
Present the expected financial payoff from the plan.
•
Controls
Discusses how the plan’s progress will be monitored: may present contingency plans to be used if performance falls
below expectations or the situation changes.
•
Contingency plans
Describe actions to be taken if specific threats or opportunities materialize during the planning period.
Exhibit 12.9 Summary of an Annual Marketing Plan for a Refrigerated
Bread Dough Product
1. Analysis of current situation
A. Market situation
•
The total U.S. market for dinner breadstuffs is enormous, amounting to about 10.5 billion servings per year.
•
Specialty breads, such as whole-grain breads, are growing in popularity, largely at the expense of traditional white breads.
•
Pillsbury’s share of the total dinner breadstuffs market, accounted for by several brands including Crescent rolls as well as refrigerated bread
dough, is small, amounting to only about 2 percent of the total dollar volume.
•
Since its introduction several years ago, refrigerated bread dough (RBD) has been able to achieve only low levels of penetration (only about
15 percent of all households have used the product) and use frequency (nearly two-thirds of the product’s volume comes from light users
who buy only one or two cans per year).
•
RBD consumption is concentrated in the northern states and during the fall and winter months (about 75 percent of volume is achieved from
September through February).
•
Marketing research result suggest consumers believe RBD is relatively expensive in terms of price/value compared to alternative forms of
dinner breadstuffs.
Exhibit 12.9 Summary of an Annual Marketing Plan for a Refrigerated
Bread Dough Product
B. Competitive situation
•
RBD's share of the total dinner breadstuffs category is likely to remain low because of the wide variety of competing choices available to
consumers.
•
The largest proportion of volume within the category is captured by ready-to-eat breads and rolls produced by supermarket chains and
regional bakeries and distributed through retail grocery stores.
•
RBD's major competition within the refrigerated dough category comes from other Pillsbury products, such as Crescent rolls and Soft
Breadsticks.
•
There are currently no other national competitors in the refrigerated bread dough category; but Merico, a small regional producer, was
recently acquired by a major national food manufacturer. Evidence suggests Merico may be preparing to introduce a competing product line
into national distribution at a price about 10 percent lower than Pillsbury's
Exhibit 12.9 Summary of an Annual Marketing Plan for a Refrigerated
Bread Dough Product
C. marcroenvironmental situation
•
changes in American eating habits may pose future problems for dinner breadstuffs in general, and for RBD in particular:
More meals are being eaten away from home, and this trend is likely to continue.
People are eating fewer starch foods.
While total volume of dinner breadstuffs has not fallen over the past decade, neither has it kept pace with population growth.
•
Increasing numbers of women working outside of the home, and the resulting desire for convenience, may reduce consumers' willingness to
wait 30 minutes while RBD bakes, even though the dough is already prepared.
•
Because RBD does not use yeast as a leavening agent, Food and Drug Administration regulations prohibit the company from referring to it
as "bread" in advertising or package copy even though the finished product looks, smells and tastes like bread.
Exhibit 12.9 Summary of an Annual Marketing Plan for a Refrigerated
Bread Dough Product
D. Past product performance .
•
Although sales volume in units increased only slightly during the past year, dollar volume increase by 24percent due to a price increase taken
early in the year.
•
The improvement to gross margin was even greater than the price increase due to an improvement in manufacturing costs.
•
The improvement to gross margin, however, was not sufficient to produce a positive net margin due to high advertising and sales promotion
expenditures aimed at stimulating primary demand and increasing market penetration RBD.
•
Consequently, although RBD showed improvement over the last year, it was still unable to make a positive contribution to overhead and
profit.
Exhibit 12.9 Summary of an Annual Marketing Plan for a Refrigerated
Bread Dough Product
2. Key issue
A. Threats
•
Lack of growth in the dinner breadstuff category suggests the market is mature and may decline in the future.
•
The large variety of alternatives available to consumers suggests it may be impossible for RBD to substantially increase its share of the total
market.
•
Potential entry of a new, lower-priced competitor poses a threat to RBD's existing share and may result in lower margins if RBD responds by
reducing its price.
B. opportunities
•
The largest percentage of RBD volume accounted for by light users suggests an opportunity of increasing volume among current users by
stimulating frequency of use.
•
Trends toward increased consumption of specialty breads suggest possible line extensions, such as whole wheat or other whole- grain
flavors.
Exhibit 12.9 Summary of an Annual Marketing Plan for a Refrigerated
Bread Dough Product
C. Strengths
•
RBD has a strong distribution base, with shelf-facings in nearly 90 percent of available retail outlets.
•
RBD sales have proved responsive to sales promotion efforts (e.g., cents off coupons), primarily by increasing volume among existing users.
•
The fact that most consumers who try RBD make repeat purchases indicates a high level of customer satisfaction
D. Weaknesses
•
RBD sales have proved unresponsive to advertising. Attempts to stimulate primary demand have not been able to increase market
penetration.
•
Consumer concerns about RBD's price/value place limits on ability to take future price increases.
Exhibit 12.9 Summary of an Annual Marketing Plan for a Refrigerated
Bread Dough Product
3. Objectives
A. Financial objectives
•
Achieve a positive contribution to overhead and profit of $4 million in current year.
•
Reach the target level of an average of 20 percent return on investment over the next five years.
B. Marketing objectives
•
Maintain market share and net sales revenues at previous year's levels.
•
Maintain current levels of retail distribution coverage.
•
Reduce marketing expenditures sufficiently to achieve profit contribution objective.
•
Identify viable opportunities for future volume and profit expansion.
4. Marketing strategy
•
Pursue a maintenance strategy aimed at holding or slightly increasing RBD volume and market share primarily by stimulating increased
frequency of use among current users.
•
Reduce advertising aimed at stimulation of primary demand/penetration and reduce manufacturing costs in order to achieve profit
contribution objective.
•
Initiate development and test marketing of possible line extensions to identify opportunities for future volume expansion.
Exhibit 12.9 Summary of an Annual Marketing Plan for a Refrigerated
Bread Dough Product
5. Marketing action plans
•
Improve the perceived price/value of RBD by maintaining current suggested retail price at least through the peak selling season (February). Review
the competitive situation and the brand's profit performance in March to assess the desirability of a price increase at that time.
•
Work with production to identify and implement cost savings opportunities that will reduce manufacturing costs by 5 percent without compromising
product quality.
•
Maintain retail distribution coverage with two trade promotion discount offers totaling $855,000: one offered in October- November to support peak
season inventories and another offered in February-March to maintain inventories as volume slows.
•
Reduce advertising to maintenance level of 1,100 gross ratings points during the peak sales period of September to March. Focus copy on
maintaining awareness among current users.
•
Encourage greater frequency of use among current users through three sales promotion events, with a total budget of $748,000, that will stimulate
immediate purchase:
one freestanding insert (FSI) coupon for 15 cents off next purchase to appear in newspaper on September 19.
one tear-off refund offer (buy three, get one free) placed on the retailer's shelves during November.
A $1 refund with proof of purchase offer placed in women's service books (i.e., women's magazines such as Good Housekeeping) during March
Exhibit 12.9 Summary of an Annual Marketing Plan for a Refrigerated
Bread Dough Product
6.Contingency plans
•
Maintain the preceding marketing strategy and action plans without change during the planning period even if Merico (see item I.B) enters the
market.
•
If Merico enters, carefully monitor its pricing and promotion actions, sales results, consumer perceptions, and so forth, and prepare
recommendations for next year's plan.