Luận văn business strategy for vinh tuong industrial corporation in competiting with the big foreigner corporations

Therefore, I decide to the topic: “Business strategy for Vinh Tuong Industrial Corporation in competing with the big foreign Corporations.” PURPOSE - Research the issues about strateg

VIETNAM NATIONAL UNIVERSITY, HANOL

SCHOOL OF BUSINESS

Nguyen Thi Mai Lan

BUSINESS STRATEGY FOR VINH TUONG INDUSTRIAL CORPORATION

IN COMPETING WITH THE BIG FOREIGN CORPORATIONS

Major: Business Administration

1.1.3 Strategy at different levels of a busmess 5

1.1.3 How strategy is managed — stralegic management 3

1.2 Analysis tools in building a strategy - - 8

1.3 Stratcgic planning sọ Hee „26

1.3.3, ODjectives cisssscseteessmsuenainesnaeneietiueses veel

CHAPTER 2: CASH STUDY OF VINH TUONG INDUSTRIAL CORPORATION

2.1 Overview of grid ceiling and gypsum board markeling in Viet nam 34

2.2 Introduction of Vinh Tuong Corporation 39

2/21 Partioular 8l và icon see dD

2.2.4 Organizational structure - - 42 3.3 Competition situatin cọ tnieriirerrree 47

3.2 Strategic analysls ion tninnererriiiriee „Š7

3.2.1 Value chain analysis cà cniieeerier „Ÿ7

viti

3.2.2 Competitive advatago seo ¬

B.B Strategic CHOICE oa esses cssssssseseessseesinsssssssssssannsiaesvaneesee ae S:) 3.3.1 The strategy of developing new produets .Ố7

3.3.2 The strategy of integrating back - 68

3.3.3 The stralegy of integrating forth - 69

3.35 The strategy of reorganizing the business 70

3.3.6 ‘The strategy of differentiation in competition ses TO

3.4.5, Information system management cesses se - 80)

3.4.6 Time lable of implementation 81 3.5 RecomimendaHion - cành see BL

REFERENCES 22211 nH0,0010011212 are eee

3.1 CoImpetitiye DOSIEIOIL óc che

3.2SWOT matr1X ào

.2 Organizational structure of Southern area

Page

22

LIST OF FIGURES

FIGURE

1,1 A thorouph stratepic management process Õ

1.2 _ The matrix for stratepic choice - - - 7

1⁄3 — The four strategies .ccccssssessssssssvanssceeessvunsseeeessesssieeeevess 9

1⁄4 Michael Porter's Five Forces Model - - 16

CHAPTER 2

FIGURE

2.1 The consumption af gypsum board in some ASEAN countnes 35

22 The consumption of gypsum board im Viet Nam (a+b) we 35,36

23 Tumover of VT2 of the years of 2000 -2005 - 41

24 QuanHty mmd Qualilfiesion of Bmployees o[ VTL 46

LIST OF ILLUSTRATIONS

ILLUSTRATIONS

2.1 Gypsum Division locations of Lafarge in the world .6 49

22 Market share of Gypsum board in Vietnam - 52

CHAPTER 3

ILLUSTRATIONS

3.1 Turnover percentaee of geographic areas oŸ market 77

ta

INTRODUCTION

NECESSITY OF THE THESIS

Strategic management is a necessary job of all managers In business

operation, strategy is @ lool lo support Ile corporation gam it objects,

mission, and vision Especially in competition, strategic management cven

keeps an important role in conducting the companies It has a main effect on

oxistonee, growing, and developing of an snlerprise A company can win lots

of success, if it has right strategies for its situation

Vinh Tuong Industrial Corporalion (VTD) is a Vietnamese business Al the

time, it is facing to the stressful competition with two big international

corporations, To keep strongly the position of leader in domestic market as well as to gain the purpose of growing and developing the business, the company must set up the suitable strategies in the new challenge period

Through the working time al VTT, T arn interested in joiring La contribute the

business strategies for company Therefore, I decide to the topic: “Business strategy for Vinh Tuong Industrial Corporation in competing with the big

foreign Corporations.”

PURPOSE

- Research the issues about strategic managermont of business including the

analysis tools, the strategic chosen, and the strategic implementation

- Research the reat situation of the company of VTT at the moment

- Apply the issues of strategic management for building up the right

effective strategies for the company in practice.

3 KEY RESEARCH AREA

Research and apply the strategic management in business is the main topic

Thesis only concentrates on using the tools to analyze the current situation of

VIL By the way, it sets up the strategies chosen ‘hen, it presents the ways

to implement the strategies in practice operation

METHODOLOGY

First, the thesis bases om the real issues of the case study of Vinh Tuong,

Industrial Corporation in competing, with two big foreign groups

Second, thesis is used methodology of descriptive analysis, logic reason combination malcrialistic history The dala is drawn from the primary and secondary sources The methods of collecting data are taking researches, and expert advices from theory foundation and personal experience

Vinally, thesis is also used statistic, formula illustration, interpreting the

issues means

CONTRIBUTIONS OF THE TLILSIS

- Introduce all process of setting up the slralegic management for a

business

+ Apply the issues in the real siluation of VTL to analyze the information, bring out the strategic chosen, and present the ways to implement the strategies in practicing conduction of the company

OUTLINE

Topic: “Business strategy for Vinh Tuong Industrial Corporation in

competing with the big foreign Corporations.”

The content of the thesis includes:

Preface

= Introduction

=) Chapter 1: Theory foundation — Strategy and analysis Lools

= Chapter 2: Case Study of Vinh Tuong Industrial Corporation

= Chapter 3: Recommendations and Conclusions - Busiticss stralegy for

Vinh Tuong Industrial Corporation in competing with the big foreign

Corporations:

= Conclusion

Reference

CHAPTER 1: THEORY FOUNDATION STRATEGY AND ANALYSIS TOOLS

"Strategy is the direction and scape of an organisation over the long-

term: which achieves adventage for the organisation through ils

configuration of resources within a challenging environment, to meet

the needs of markets and to fulfill stakeholder expectations"

In other words, strategy is about:

* Where is the business trying to get to in the long-term (direction)?

* Which markets should a business compete in and what kinds of

activities are involved in such markets? (markets; scope)

* How can the business perfor better than the competition in those markets? (advantage)?

* What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)?

1.13

* What external, covironmental factors affect the businesses’ ability to

compete? (environment)?

* What are the values and expectations of those who have power in

and around the business? (stakeholders)

Strategy al chllerent levels ofa Business

Strategies exist at several levels in any organization - ranging from the overall business (or gronp of businesses) through to individuals

working in it

Carporate Strategy - is concemed with the overall purpose and scape

of the business to meet slakeholder expectations This is a crucial

level since it is heavily influenced by investors in the business and

acls to guide stralegic decision-making throughout the business

Corporate strategy is often stated explicitly in a "mission statement”

Business Unit Strategy - is concerned more with how a business

competes successfully in a particular market It concerns strategic decisions about choice of products, meeting needs of customers,

gaining advantage over competitors, exploiting or creating new opportunities ete

Operational Strategy - is concerned with how each part of the

business 14 orgarnzcd to deliver the corporate and busmess-unil level

strategic direction Operational strategy therefore focuses on issues of Tesources, proc

s, people etc

Llow strategy is managed strategic management

Tu ils broadest sense, stralegic managemeril is about taking “strategic

decisions" - decisions that answer the questions above

In practice, a thorough strategic management process has three main components, shown in the figure below:

This is all about the analyzing the strength of businesses’ position and

understanding the important extemal factors that may influence that position The process of Strategic Analysis can be assisted by a number of tools that will be presented in the next part

Strategic Choice

The process involves understanding the nature of stake holder

expectations (the “ground rules”), identifying strategic options, and then evaluating and selecting strategic options

Normally, the business can use the matrix of strategic choice to decide

what its best strategies are.

1 Entry new market

Ponetrate current market

3 Develop the product

4, Integrate in horizon

5, Eliminating Liquidating

Reduce expense Diversify in forus a

centre

Diversity in horizon Diversity in combining

Entry new market

Penetrate current market

Develop the product Integrate forth

Integrate back Integrate int horivan Diversify in focus a

This is ofton the hardest part Whon a strategy has been analyzed and

selected, the task is then to translate it into organizational actions

They include the action plans of administrative management,

marketing, finance, R&D, information system management

13 ANALYSIS TOOLS IN BUILDING A STRATEGY

1.2.1, Competitive advantages

Competitive Advantage - Definition

A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or

by providing greater benefils and service thal justifies higher prices Competitive Strategies

Following on from his work analysing the competitive forces in an industry, Michael Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage The four strategies relate to the extent to which the scope of a businesses’ activities are narrow versus broad and the extent to which a business

secks to dilferentiale ils products

‘The four strategies are summarized in the figure below:

Figure 1.3, — The four strategies

The differentiation and cost leadership strategies seek competitive

advantage in a broad range of market or industry segments By

contrast, the differentiation focus and cost focus strategies are

adopted in a narrow market or industry,

Strategy - Differentiation

This strategy involves selecting one or more criteria used by buyers in

a market - and then positioning the business uniquely to meet those

criteria, This strategy is usually associated with charging a premium

price for the product - often to reflect the higher production costs and

extra value-added features provided for the consumer Differentiation

is about charging a premium price that more than covers the

additional production costs, and about giving customers clear reasons

to prefer the product over other, less differentiated products

Examples of Differentiation Strategy: Mercedes cars; Bang & Olufsen

Strategy - Cast Leadership

‘With this strategy, the objective is ta become the lowest-cost producer

in the industry Many (perhaps all) market segments in the industry

are supplied with the emphasis placed minimizing costs If the

achieved selling price can at least equal (or near) the average for the

market, then the Jowest-cost producer will (in theory) enjoy the best

profits This strategy is usually associated with large-scale businesses

offering "slandard" products with relatively little differentialion that

are perfectly acceptable to the majority of customers Occasionally, a

low-cost leader will also discount its product to maximize sales,

particularly if i has a significant cost advantage over the competition

and, in doing so, it can further mcrease its market share

Examples of Cost Leadership: Nissan; Tesco: Dell Computers

Strategy - Differentiation Focus

Tn the differentiation focus strategy, a business aims to dilferentiale within just one or a small number of target market segments Ihe special customer needs of the segment mean that there are opportunities 10 provide products that are clearly different from competitors who may be targeting a broader group of customers ‘Ihe important issue for any business adopting this strategy is to ensure thet customers really do have different needs and wants - in other words that there is a valid basis for differentiation - and that existing

competitor products are not meeting those needs and wants

Examples of Differentiation Focus: any successful niche retailers, (e.g The Perfume Shop); or specialist holiday operator (e.g Carrier)

io

Strategy - Cast Focus

Here a business seeks a lower-cost advantage in just on or a small number of market segments, The product will be basic - perhaps a similar product to the higher-priced and featured market leader, but acceptable to sufficient consumers Such products are often called

"Tne-toots"

Examples of Cost Focus: Many smaller retailers featuring own-label

or discounted label products

Competitor analysis

Competitor Analysia is an imporlint part of the siralogic planning

process This revision note outlines the main role of, and steps in,

commpelilor analysis

Why bother to analyse competitors?

Some businesses think it is best to get on with their own plans and ignore the competition Others become obsessed with tracking the actions of competitors (often using underhand or illegal methods) Meny businesses are happy simply to track the compelilion, copying

their moves and reacting to changes

Competitor analysis has several imporiant.roles in slralogic plaming

« To help management understand their competitive advantages/

disadvantages relative 1o compelitors

+ To generate understanding, of competitors” past, present (and most

imporlanly) Culure siralegies

+ To provide an informed basis to develop strategics to achieve

competitive advantage in the future

* To help foreeast the returns that may be made from future

investments (e.g how will competitors respond to a new product

or pricing strategy?

Questions to ask

What questions should be asked when undertaking competitor analysis? ‘the following is a useful list to bear in mind

« Who are our competitors? (see the section on identifying

competitors further below)

«What threals do they pose?

«What is the profile of our competitors?

«What are the objectives of our competitors?

+ What strategies are ow competitors pursuing and how successful

are these slralegies?

«What are the strengths and weaknesses of our competitors’?

+ How are our compelilors likely to respond to any changes to the

way we do business?

Sources of information for competitor analysis

Davidson (1997) describes how the sources of competitor information can be neatly grouped into three categories:

« Recorded data: this is casily available in published form cither

intemally or externally Good examples include competitor annual reports and product brochures;

* Observable data: this has to be actively sought and often assembled from several sources A good example is competitor

pricing;

«Opportunistic data: to get hold of this kind of data requires a lot

of pinning and organization Much of it is “anecdotal”, coming from discussions with suppliers, customers and, perhaps, previous

management of competitors

‘the table below lists possible sources of competitor data using Davidson's categorization:

Recorded Data Observable Data (Opportunistic Data

Annual reporl — &bccing / price lists [Meetings with suppliers

ccounts

lAdvertising

campaigns

jewspaper articles [Promotions Sales force meetings

|Analysts reparts [Tenders Seminars / conferences

Social contacts with]

Table 1.1 - Sources of competitor data

In his excellent book [Even More Offensive Marketing], Davidson likens the process of gathering competitive data to a jigsaw puzzle Each individual picce of data docs not have much value The important skill is to collect as many of the pieces as possible and to assemble them into an overall picture of the competitor This enables you to identify any missing pieces and to take the necessary steps to

collect them

‘What businesses need to know about their competitors?

The tables below lists the kinds of competitor information that would

help businesses complete some good quality competitor analysis

You can probably think of many more pieces of information about a

competitor that would be useful However, an important challenge in

competitor analysis is working out how to obtain competitor

information that is reliable, up-to-date and available legally (!)

‘What business probable already know their campetitors?

"Overall sales and profits

= Sales and profits by market

«Sales by main brand

= Cost structure

= Market shares (revenues and volumes)

= Organization structure

= Distribution system

"= Tdentity/profile of sertior management

= Advertising strategy and spending

= Cuslomer/sonsumer profile & altitudes

= Customer retention levels

What businesses would really like to know about competilors?

"Sales and profits by product

* Relative costs

= Cuslomer salisfaclion and service levels

= Customer retention levels

= Distribution costs

= New product strategies

* Size and quality of customer databases

= Advertising effectiveness

= Future investment strategy

= Contractual terms with key suppliers

«Terms of strategic partnerships

1.23 Five forces model

Defining an industry

An industry is a group of firms that market products which are close

substitutes for each other (e.g the car industry, the travel industry)

Some industries are more profitable than others Why? The answer

lies in understanding the dynamics of competitive structure in an

industry

The most influential analytical model for assessing the nature of competition in an industry is Michael Porter's Five Forces Model, which is described below:

Porter explains that there are five forcos that determine industry attractiveness and long-run industry profitability ‘These five

"competitive forces" are

- ‘The threat of entry of new competitors (new entrants)

+ The threat of substitutes

- The bargaining power of buyers

- ‘The bargaining power of suppliers

- The degree of rivalry between existing competitors

Threat of New Entrants

New entrants to an industry can raise the level of competition, thereby

reducing its attractiveness ‘The threat of new entrants largely depends

on the barriers to entry Iligh entry barriers exist in some industries

(e.g shipbuilding) whereas other industries are very easy lo enter (e.g

estate agency, restaurants) Key barriers to entry include’

- Economies of scale

- Capital / investment requirements

- Customer switching costs

- Access to industry distribution channels

+ The likelihood of retaliation trom existing industry players

Threat of Substitutes

The presence of substitute products can lower industry attractiveness and profitability because they limit pree levels The threat of

substitute products depends on:

- Buyers! willingnoss to substivule

- The relative price and performance of substitutes

- ‘The costs of switching to substitutes

Bargaining Power of Suppliers

Suppliers are the businesses that supply materials & other products into the industry,

‘rhe cost of items bought from suppliers (e.g raw materials, components) can have a significant impact on a company's profitability Tf suppliers have high bargaining power over a company, then in theory the company's industry is less attractive I'he bargaining power of suppliers will be high when:

= There arc many buyers and fow dominant suppliers

- There are undifferentiated, highly valued products

- Suppliers threaten to integrate forward into the industry (e.g brand manufacturers threatening to set up their own retail outlets)

- Buyers do not threaten to integrate backwards into supply

- The industry is not a key customer group to the suppliers

Bargaining Power of Buyers

Buyers are the people/organizations who create demand in an industry The bargaining power of buycrs is greater when

+ There are few dominant buyers and many sellers in the industry

- Products are standardized

- Buyers threaten to inlegrate backward into the industry

- Suppliers do not threaten to integrate forward into the buyer's

- The structure of industry costs - for example, mdustries wilh

high fixed costs cncourage competitors to fill unused capacity by

price cutting

- Degree of differentiation - industrics where products are commodities (e.g steel, coal) have greater rivalry; industries where competitors can differentiate their products have less rivalry

- Switching costs - rivalry is reduced where buyers have high switching costs - ie there is a significant cost associated with the decision to buy a product from an altemative supplier

- Strategic objectives - when competitors are pursuing aggressive growth strategies, rivalry is more intense Where competitors are

“milking” profits in a.mature industry, the degree of rivalry is

- Exit barriers - when barriers to leaving an industry are high (e.g the cost of closing down factories) - then compelitors tend to

exhibit greater rivalry

PEST analysis and Porter's Five-Force analysis Tl is also a very

popular tool with business and marketing, students because it is quick

and easy to learn.

The Key Distinction - Internal and External Tssues

Strengths and weaknesses are internal factors For example, a

strength could be your specialist marketing expertise A weakness

could be the lack of a new product

Opportunities and threats are external factors For cxample, an opportunity could be a developing distribution channel such as the

Intemet, or changing consumer lifestyles that potentially increase

demand for a company's products A threat could be a new compelilor

in an important existing market or a technological change that makes existing products potentially obsolete

It is worth pointing out that SWO'T analysis can be very subjective -

two people rarely come-up with the same version of a SWOT analysis

even when given the same information about the same business and

its environment Accordingly, SWO'E analysis is best used as a guide

and not a prescription Adding and weighting criteria to each factor inercases the valichty of the analysis

Areas to Consider

Some of the key areas to consider when identifying and evaluating

Strengths, Weaknesses, Opportunities and Threats are listed in the

example SWOT analysis below:

>Leagng Branes >Weikiranes

>Disrbuoan tham Poor access i ieivbution

>ustomer Loyalty) Relationship mm

>Producton quality Unreliable product senvee

>Managsrert >Managnment

> Ehanging custamiertastes onanging customer tastes

>Lineraination at peographic marcas gang gengranhfs markrts

>Teemologieal advances Technological vances

> changes in government pies >ohanges im government politics

>Lower personal taxes > Tex inereases

7 Onange m population age structure onange is population age-stveture

> Mew astriowtion enarmats Mew eltretion enannets Table 1.2 - SWOT analysis

SWOT matrix

Basing on the SWOT analysis, the matrix of SWOT can be formed to

give out four kinds of strategy for the business

Strength (S) (S + O) The strategy of | (S + T) The strategy of

s making the best of | using the strengths to

= opportunities by using | overcome the threats

-N, Øpporlurnles 1o nnprove weaknesses to avoid the

the weaknesses threats

- Wa

io

Table 1.3.— SWOT matrix

Value chain analysis

Introduction

Value Chain Analysis desoribes the activities that take place in a business and relates them to an analysis of the competitive stength of the business Influential work by Michael Porter suggested that the activities of a business could be grouped under two headings

(1) Primary Activities - those that are directly concemed with creating and delivering a product (e.g component assembly); and

(2) Support Activities, which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g human

Tesourcs management) Tt is rare for a business to undertake all

primary and support activities

Value Chain Analysis is one way of identifying which activities are best undertaken by a business and which are best provided by others

(out sourced")

Linking Value Chain Analysis to Competitive Advantage

What activities a business undertakes is directly linked to achieving compelilive advanlage For example, a business which wishes to outperform its competitors through differentiating itself through

higher quality will have to perform its value chain activities better

than the opposition By contrast, a strategy based on sccking cost leadership will require a reduction in the costs associated with the

value chain activities or a reduction in the total amount of resources used

Primary Activities

Primary value chain activities include:

Primary

Description

Activity

Inbound |All those activities concerned with reeeiving and

logistics stormg externally sourced materials

Whe manufacture of products and services - the wa’

Operations jin which resource inputs (c.g walorials) ard

konverted to outputs (e.g products)

Outbound |All those activities associated with getting finishe logistics goads and services to buyers

[Essentially an information activity - informing buyers Marketing

and consumers about products and services (benefits,

and sales

juse, price etc.)

|All those activities associated with maintaining} Service

producl performance after the produc has been sold

this concems how resources are acquired for a

Procurement [business (e.g sourcing and negotiating with materials|

bupplen)

Human [Those - acliviies concerned = with reœuiing)

Resource developing, motivating and rewarding the workforce Management [of a business

Achivities concerned wih managing information

Technology

roccssing and the development and protection off

Development

Pmowledge" in a business

(Concemed with a wide range of support systems and]

tafrastructure|functions such as finance, planing, quality control]

land general senior management

Steps in Value Chain Analysis

Value chain analysis can be broken down into a three sequential steps: (1) Break down a market/organisation into its key activities under cach of the major headings in the model;

(2)Assos the potental for adding value via cost advantage or differentiation, or identify current activities where a business appears to be at a competitive disadvantage:

(3) Determine strategies built around focusing on activities where competitive advantage can be sustained

1.3 STRATEGIC PLANNIXNG

131 Values and vision

Introduction to Vatues and Vision

‘Values form the foundation of a business? manageineut style

Values provide the justification of behavior and, therefore, exert

significant influonce ou marketing decisions

Consider the following examples of a well-kmown business — BT Group - defining its values

BT's aotivities are underpinned by a set of values that all BT people

are asked to respecL

- We put customers first

= We are professional

- We respect each other

- We work as one team

- We are committed to continuous improvement

These are supported by our vision of a commmunications-rich world - a world in which everyone can benefit from the power of communication skills and technology

A society in which individuals, organizations and communities have unlimited access to one another and to a world of knowledge, via a

mult

icity of communications Icchnologies meluding voice, data, mobile, intemet - regardless of nationality, culture, class ar education

Qur jeb is to facilitate effective communication, irrespective of

geography, distance, time or complexity

(Source: BT Group ploweb site)

Why are values important?

Many Japanese businesses have used the value system to provide the motivation to make them global market leaders They have created an obsession about winning that is communicated at all levels of the

business thal has enabled them to take market share from competitors

that appeared to be unassailable

For example, at the start of the 1970°s Komatsu was less than one

third the size of the market leader Caterpillar and relied on just one line of smaller bulldozers for most of its revenues By the late 1980's it had passed Caterpillar as the world leader in earth-moving equipment It had also adopted an aggressive diversification strategy that led it into markeis such as industrial robots and semiconductors

It “values” shape the behavior of a business, what is meant by

“vision”?

k 3

Tơ suecood in the long term, businesses need a vision of how they will change and improve in the future ‘fhe vision of the business gives it energy It helps motivate employees It helps set the direction of

corporate and marketing strategy

What are the components of an effective business vision?

Davidson identifies six requirements for success:

- Provides future direction

- Lxpresses a consumer benefit

- Ts realistic

- Is motivating

- Must be fully communicated

- Consistently followed and measured

2, Mission

A strategie plan starts with a clearly defined busingss mission

Mintzberg defines a mission as follows:

“A mission descrihes the organisation’s hasic function in society,

im terms of the products and services it produces for its

customers”.

A clear business mission should have cach of the following

‘Whai business and ee

The niles thal guide

How Ihe business

Why does the business exist? Is it to create wealth for

shareholders? Does it exist to satisfy the needs of all stakeholders

(including employees, and society at large?)

Q) A Strategy and Strategic Scope

A mission statement provides the commercial logic for the business and so defines two things

- The products or services it offers (and therefore its competitive posilion)

- The competences through which it ties to succocd and its method of competing

A business’ strategic scope defines the boundaries of its

operations ‘These are set by management

For example, these boundaries may be sat in terms of geography, market, business method, product etc ‘the decisions management

make about strategic scope define the nature of the business

(3) Policies and Standards of Behavior

A mission needs to be translated into everyday actions For

example, if the business mission ineludes delivering “outstanding

customer service”, then policies and standards should be created

and monilored that tesL delivery

‘These might include monitoring the speed with which telephone calls are answered in the sales call centre, the wumber of complaints received from customers, or the extent of positive

customer feedback via questionnaires,

(4) Values and Culture

The values of a business are the basic, often un-stated, beliefs of

the people who work in the business These would include:

+ Business principles (eg, social policy, commitments to customers)

+ Loyalty and commitment (e.g are employees inspired to sacrifice their personal goals for the good of the business as a

30

whole? And docs the business demonstrate a high level of commitment and loyalty to its staff?)

+ Guidance on expected behavior — a strong: sense of mission helps create 2 work environment where there is 2 common

purpose

What role docs the mission statement play in marketing

planning?

In practice, a strong mission statement can help in three main ways:

«It provides an outline of how the marketing plan should seek to

fulfill the mission

* Tt provides a means of evalualing and screerong the markeling

plan; are marketing decisions consistent with the mission?

+ It provides an incentive to implement the marketing plan

Objectives

Introduction

Objectives set out what the business is trying to achieve

Objeclives can be set al iwo levels

(1) Corporate level

Those are objectives that concer the business or organization as a whole

Examples of Scorporale objectives” might include:

+ We aim for a return on investment of at least 15%

31

+ We aim to achieve an operating profit of over £10 million on

sales of at least £100 million

+ We aim to imcrease carnings por share by at Ivast 10% every

year for the foreseeable future

(2) Functional level

Lg, specific objectives for marketing activities

Examples of functional marketing objectives” might include:

« We aim to build customer database of at least 250,000

houscholds wilhin the next 12 months

+ We aim to achieve a market share of 10%

+ We aim to achieve 75% customer awareness of our brand in

our target markets

Both corporate and functional objectives need to conform to the commonly used SMART criteria

The SMART criteria (an important concept which you should try

to remember and apply in exams) are summarized below:

Specific - the objective should slale exactly whal is to be achieved

Measurable - an abjective should be capable of measurement ~ so

thal it is possible to defermme whether (or how far) it has beer

achieved

Achievable - the objective should be realistic given the circumstances in which it is set and the resources available to the

business.

Relevant - objectives should be relevant to the people responsible for achieving them

Time Bound - objectives should be sot with a ime-frame in mind

‘These deadlines alsa need to be realistic

33