Strategic Planning: A Dynamic Duty
Coca-Cola and Pepsi Cola are household names. Together they control soft drink market. Their success can be attributed to their overall strategy to produce and promote their products. They both decided to build global brands to bottlers throughout the world. And a portion of the proceeds goes toward advertising to build and maintain brand awareness. The bottlers are responsible for producing and distributing to vending machines, supermarkets, restaurants, and other retail outlets. However, the advertising is left up to Coca-Cola and Pepsi. In addition, the bottlers must sign an agreement that prohibits them from distributing competing cola brands. Their strategy is simple, yet dynamic. It forces bottlers to enter into exclusive agreements, which creates a high barrier to entry into the industry. Any potential competitor must create their distribution network rather than use the existing one. And the large amounts of money spent on advertising helps to develop a global brand name and differentiate their products. Furthermore, brand loyalty allows both companies to charge high prices. Accordingly, managers must study the way other organizations behave and identify their strategies. In an uncertain or unstable competitive environment, managers must hold fast in thorough planning to find a strategy that allows them to compete effectively. Strategic planning involves three major steps: determining an organization’s mission and major goals, choosing strategies to realize the mission and goals, and implementation of the strategies.
Determining the organization’s mission and goals is the first step of the planning process. To define the mission managers must ask themselves “Who are our customers, are their needs being satisfied, and how are we satisfying them?” These questions allow the manager to identify the needs for the present and future. They also help the managers to plan and establish appropriate goals and disregard inappropriate goals. Developing goals give an organization a sense of direction. Coca-Cola’s mission to maximize shareowner value over time is backed by six key beliefs: 1) Consumer demand drives everything we do. 2) Brand Coca-Cola is the core of our business. 3) We will serve customers a broad selection of the nonalcoholic ready to drink beverages they want to drink throughout the day. 4) We will be the best marketers in the world. 5) We will think and act locally. 6) We will lead as a model corporate citizen (Cola, 2000). These objectives are their strategy to increase sales to improve profit. Their goals are ambitious and require that managers continually improve performance capabilities. Once the mission and goals are agreed upon and formally stated in a corporate plan, the next step is to formulate a strategy.
Strategy formulation involves managers analyzing an organization’s current situation and then developing strategies to accomplish its mission and achieve its goals. It...