6.2Management Strategy

Management strategy is easiest to grasp as a three-stage flow: first grasp the current state using frameworks that analyze your company and the market, then translate that into marketing—who to deliver what value to—and finally put in place mechanisms that measure whether the strategy is proceeding as planned. At level 3, exams test linking frameworks together, such as feeding an opportunity identified via SWOT into a PPM resource-allocation decision.

6.2.1Competitive strategy analysis tools

• SWOT analysis organizes internal factors—a company's strengths and weaknesses—alongside external environmental factors—opportunities and threats. The level-3 usage is deriving strategic direction from combinations of factors (cross-SWOT)—for example, an SO strategy that leverages strengths against opportunities, or a WT strategy that protects weaknesses from threats.
• PPM (Product Portfolio Management) classifies products or businesses along market growth rate and market share into four quadrants—Stars (high growth, high share), Cash Cows (low growth, high share), Question Marks (high growth, low share), and Dogs (low growth, low share)—used to decide resource allocation. A typical exam pattern is the flow of funds: investing profit from "Cash Cows" into "Question Marks" to grow them into "Stars."
• Five Forces analysis examines the five competitive forces shaping an industry's profitability—
  ①rivalry among existing competitors,
  ②threat of new entrants,
  ③threat of substitutes,
  ④bargaining power of buyers, and
  ⑤bargaining power of suppliers. Value chain analysis views the sequence of company activities from raw-material procurement through manufacturing, shipping, sales, and service as a chain that generates added value, splitting them into primary activities (inbound logistics, operations, outbound logistics, marketing/sales, service) and support activities (firm infrastructure, HR management, technology development, procurement) to visualize where value is created and cost incurred, identifying the source of competitive advantage. Core competence is a company's unique central strength (technical capability, know-how, etc.) that competitors cannot easily imitate—the important connection is from analysis to execution: using value-chain analysis to locate the core competence, then concentrating management resources there.

6.2.2Marketing and measuring strategy

• STP in marketing is a three-step process: Segmentation (dividing the market), Targeting (choosing which segment to pursue), and Positioning (clarifying the company's stance). 4P is the combination of four elements—Product, Price, Place, Promotion—that executes the aim STP sets (the marketing mix). Distinguish the relationship: STP is the decision of "who and how to be seen," while 4P is the execution that realizes it.
• KGI (Key Goal Indicator) quantifies the ultimate goal itself that a management strategy must achieve (e.g., a 10% operating margin). CSF (Critical Success Factor) is the factor that is especially key to success in reaching the KGI (e.g., strengthening new-customer acquisition). KPI (Key Performance Indicator) is the intermediate metric used to routinely gauge progress on a CSF (e.g., number of new sales opportunities). Grasp the hierarchy: KGI (the goal) -> CSF (the key) -> KPI (the day-to-day yardstick).
• Balanced Scorecard (BSC) evaluates strategy achievement from four perspectives—financial, customer, internal business process, and learning and growth—not just financial metrics. The essence of BSC is designing it as a causal chain, setting a KGI/CSF/KPI within each perspective so that the financial goal is underpinned by improvements in the non-financial perspectives (customer satisfaction, operational efficiency, employee development).

6.2.3CRM/SCM/ERP

• CRM (Customer Relationship Management) is a method/system that centrally manages customer relationships to raise customer satisfaction and encourage repeat business. SCM (Supply Chain Management) is a method/system that optimizes the entire supply network from raw-material procurement through production, logistics, and sales. ERP (Enterprise Resource Planning) is a system that integrates and manages a company's core operations—accounting, HR, production, sales, and so on (an ERP package). Distinguish their differing scope: customers, the supply network, and the entire core-operations base, respectively.

Take mid-size food maker B as an example, tracing the chain from analysis through execution and measurement. First it runs a SWOT analysis, identifying a strength (proprietary fermentation technology) and an opportunity (rising health consciousness), and combines them into an SO strategy: "enter the health-food business by leveraging fermentation technology." Analyzing the value chain next, the company finds its strength concentrated in the primary activity of "technology development," and identifies this fermentation technology as its hard-to-imitate core competence. Building on this, classifying its several businesses with PPM, the flagship product sits in "Cash Cow" (growth has slowed but share is high) while the new fermented health-food business sits in "Question Mark" (high growth but still low share), and management decides to invest the flagship's profits heavily into the new business built on the core competence. At the same time, a Five Forces analysis surfaces industry-structure issues—the threat of substitutes (other health foods) and weak bargaining power against large retailers—confirming the need for a strategy that avoids price competition. To bring the new business to market, STP selects health-conscious people in their 30s-40s as the priority segment (targeting) and stakes out a position distinct from existing health foods—"sustainably continued through the power of fermentation" (positioning)—then translates this into 4P: product design, price band, sales channel (mainly e-commerce), and promotion (social media). For tracking progress, the company sets "8% operating margin on the new business" as its KGI, defines the key CSF as "raising the repeat-purchase rate," and tracks "conversion rate to subscription purchases" as the day-to-day KPI. To avoid over-relying on financial figures, it also uses the four BSC perspectives, positioning customer-satisfaction scores and the number of new product proposals (the learning-and-growth perspective) as a causal chain underpinning the financial-perspective KGI. Operationally, it centrally manages customer data with CRM, optimizes supply with SCM, and integrates accounting, production, and sales data with ERP.

6.2.4Section summary

• SWOT analysis = internal (strengths/weaknesses) x external (opportunities/threats), crossed to derive strategic direction. PPM = four quadrants of growth rate x share guiding resource allocation
• Value chain (primary/support activities) locates core competence, then resources concentrate there. Hierarchy: KGI -> CSF -> KPI
• BSC designs four perspectives (financial/customer/process/learning-growth) as a causal chain. CRM = customers, SCM = supply network, ERP = the entire core-operations base—differing scope