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. Keep the three stages—analysis, execution, measurement—in mind.

6.2.1Competitive strategy analysis tools

• SWOT analysis is a framework that organizes internal factors—a company's strengths and weaknesses—alongside external environmental factors—opportunities and threats. It serves as the starting point for strategy formulation, such as leveraging strengths against opportunities or protecting weaknesses from threats.
• PPM (Product Portfolio Management) classifies products or businesses along two axes—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 how to allocate management resources. A typical decision is investing funds earned from "Cash Cows" into "Question Marks."
• Five Forces analysis examines the five competitive forces that shape an industry's profitability—
  ①rivalry among existing competitors,
  ②threat of new entrants,
  ③threat of substitutes,
  ④bargaining power of buyers, and
  ⑤bargaining power of suppliers—to assess industry attractiveness and a company's positioning. Core competence is a company's unique central strength (technical capability, know-how, etc.) that competitors cannot easily imitate; the idea is to build business strategy around this strength.

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 turns the aim set by STP into execution (the marketing mix).
• 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. It builds "customer satisfaction," "operational efficiency," and "employee development," which financial figures alone cannot capture, into the strategy.

6.2.3CRM/SCM/ERP and the value chain

• 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.
• 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. It visualizes where value is created and where costs are incurred across each activity (primary and support activities), identifying the source of competitive advantage.

Take mid-size food maker B as an example, tracing the flow from analysis through execution and measurement. First it runs a SWOT analysis, identifying a strength (proprietary fermentation technology, its core competence) and an opportunity (rising health consciousness). 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. Next, classifying its several businesses with PPM, the company finds its flagship product sits in "Cash Cow" (growth has slowed but share is high) while a new functional-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. To bring this 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 (using social media). For tracking strategic progress, the company sets "8% operating margin on the new business's sales" 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 alone, it also uses the four BSC perspectives, evaluating customer-satisfaction survey scores and the number of new product proposals from the development team (the learning-and-growth perspective) alongside the financials. Operationally, it centrally manages customer data with CRM to inform repeat-purchase initiatives, optimizes supply from raw materials to stores with SCM, and integrates accounting, production, and sales data with ERP.

6.2.4Section summary

• SWOT analysis = internal (strengths/weaknesses) x external (opportunities/threats). PPM = four quadrants of growth rate x share (Star/Cash Cow/Question Mark/Dog) guiding resource allocation
• Hierarchy: KGI (goal) -> CSF (key) -> KPI (day-to-day metric). BSC evaluates via four perspectives: financial/customer/internal process/learning-growth
• CRM = customers, SCM = supply network, ERP = the entire core-operations base—differing scope. Value chain = a chain of value-adding activities used to identify the source of competitive advantage