Strategic Management. Everything You Need to Know

 

Alexey Cherkasov

The book “The quintessence of strategic management. What you really need to know to survive in business” by Philip Kotler, Roland Berger, and Nils Bickhoff provides a basic understanding of strategy, what kinds of strategies are the most basic, and how they interact.

Strategic management book consists of three main chapters.

The first chapter is an introduction

It describes the basics of strategy and strategic management. The authors give a definition of the strategy, while asking to perceive the definition of “as basic, not final”, and describe the process of strategic planning, which is divided into four components.

• General planning
• Strategic planning
• Operational planning
• Operational planning management

The second chapter deals with the key tools of strategy development, the principles of their interaction and combination

The chapter begins with a description of the SWOT analysis as the basis of all strategy development tools. SWOT analysis consists of 4 categories: Strengths; Weaknesses; Opportunities; Threats. The task of the SWOT analysis is to give a structured description of the situation on which you need to make a decision.

The following chapter presents the main tools for strategy development

Ansoff’s Product/Market Matrix. The Ansoff’s Product/Market Matrix helps to choose one of the typical strategies that is most suitable under these market conditions.  The matrix consists of 2 axes (product and market), which divide the field into 4 squares, each of which corresponds to one of the 4 possible marketing strategies:

• Market penetration (coordinates existing products / existing markets);
• Market development (coordinates existing products / new markets);
• Product development (coordinates new products / existing markets);
• Diversification (coordinates new products / new markets).

Ansoff’s Product/Market Matrix

Portfolio Management: Portfolio Analysis (Matrix). Portfolio analysis – a set of measures aimed at evaluating the work of the enterprise for the subsequent analysis of the current strategy and making adjustments to it. Several methods based on the construction of 2-dimensional matrices will be used in the portfolio analysis.

Matrix BCG (Boston Consulting Group). Each of the quadrants in the BCG model is given a figurative name:

“Stars”. These include, as a rule, new business areas, which occupy a relatively large share of the booming market, in which operations generate high profits.

“Cash cows”. These are business areas that in the past have gained a relatively large market share.

“Question marks”. These business areas compete in growing industries, but occupy a relatively small market share.

“Dogs”. These are business areas with a relatively small market share in slow-growing industries.

Matrix BCG

Analyzing Business Strategies. The task of business strategies is to determine competitive advantages in each strategic segment. They are designed to answer the question: “Which competitive advantages do we need or do we have?”

The Market-Based View: The structure-conduct-performance paradigm and Porter’s five forces

The Structure-Conduct-Performance Paradigm is based on the fact that the industry and its structure are the decisive factors that determine the behavior of players in the market and the potential of the market.

Based on the Structure-Conduct-Performance Paradigm, Michael Porter developed his concept of the five forces, designed to show companies exactly what positioning and strategy options are at their disposal  in the context of opportunities and threats in a particular market.

Porter’s five forces are:

• Rivalry among existing competitors;
• Bargaining power of suppliers;
• Bargaining power of buyers;
• Threat of new entrants;
• Threat of substitute products.

Porter Five Forces

The Resource -Based View: The core competency approach

The core competency – a competency that provides a competitive advantage. These core competencies may be resources, skills, general assets and etc.

Dynamic markets: the simple rules approach. These simple rules according to Kathleen Eisenhardt can be broken down into five categories:

1. How-to rules – determine how a company should carry out its key processes and how to make them unique;

2. Boundary rules help you to determine which business opportunity managers need to grasp, and what – not;

3. Priority rules help managers rank emerging business opportunities;

4. Timing rules help to synchronize the dynamics of markets and business opportunities with internal processes — such as the development of new products;

5. Exit rules teach managers to give up outdated business opportunities at the right time.

Network Approaches: the business model – an integrative frame of reference for describing a strategy

The method of building business models emerged in the mid-1990s. as a response to the phenomena occurring in and around network savings (the technological process brought by the Internet, and the globalization of companies and economic processes).

Three components:

• The choice of product / market combinations;
• The determination of the revenue mechanism;
• The configuration and execution of value adding activities.

The third chapter is devoted to the four most important concepts in the field of strategic management

1. Growth strategy

Seven successful growth strategies:

• Innovation and branding;
• Imposing new rules on other players;
• Globalization;
• A focused portfolio is a growth strategy;
• Reducing vertical integration through outsourcing;
• Market presence and consolidation through mergers and acquisitions through mergers and acquisitions ensures dominance in the industry by buying up the main competitors;
• Network / partnership / virtualization

2. Business Process Reengineering (BPO)

4 basic requirements for reengineering:

• fundamentality,
• radicalism,
• scale,
• processes

Business Processes

3. Strategic brand management

The purpose of branding is to maintain customer loyalty to the company in the long term and strengthen the brand.

5 elements of brand value:

• brand loyalty,
• recognition,
• perceived quality,
• associations,
• other advantages of the brand.

4. Strategic games

Game theory is a mathematical theory of strategic behavior that analyzes situations in which a decision is required. Conceptually, strategic games are dynamic modeling of real situations in business.

The book allows in a concise manner to get acquainted with the most important theoretical knowledge in the field of strategic management. The authors clearly and consistently help the reader to understand what a strategy is, what are the main tools for developing a strategy and how they are interconnected.

Most of the tools being analyzed are accompanied by explanatory examples, which makes reading and understanding of the material easier.

Also in the book there are many recommendations and references to the literature, revealing the topic of strategic management in more detail. In the final part of the book discusses the practical aspects of strategy development.

The authors also pay attention to the fact that even the best strategies will not always be correct and optimal in various situations. You can, using a book and your knowledge, reduce risks when making a strategic decision.

The book is recommended for beginners in matters of strategy, as well as for all who develop successful strategies for their company and its employees.

PS: I also recommend to read another great book by Philip Kotler – Lateral Marketing: New Techniques for Finding Breakthrough Ideas

https://tinyurl.com/9mafczar

The choice between insightful and inciteful words

 

Civil society and civility

Non-profit organisations often characterise themselves as being part of ‘civil society’. Civil society has been defined and redefined over many years, but it broadly refers to “a wide array of organisations: community groups, non-governmental organisations (NGOs), labor unions, indigenous groups, charitable organisations, faith-based organisations, professional associations and foundations” (World Bank). As other ‘for-purpose’ and social enterprise models have emerged, alongside entities promoting transparency, sustainability, and accountability, the boundaries for ‘civil society’ have also expanded.

Historically, the purpose of civil society was to achieve eudaimonia – common wellbeing or flourishing. Aristotle used the term to refer to the highest human good, and defined this as the aim of practical philosophy (applied ethics). (Recommended reading: Practical wisdom: The right way to do the right thing, by Barry Schwarz and Kenneth Sharpe, Riverhead books, 2010)

In our interpersonal communications, being ‘civil’ simply means being courteous and polite with each other. In other words, treating others as we would like to be treated. Again, therefore, the term refers to common wellbeing.

Hijacked emotion

As advocates for various causes, non-profit organisations make extensive use of social media and various other methods to engage target audiences, and even to issue ‘calls to action’. Regrettably, sometimes when we appeal to emotions the intended outcome of advocacy action gets lost, with poorly managed emotions taking over.

We see this happening when advocates start attacking opponents (ad hominem arguments) rather than focusing on the issue or problem, and the associated evidence.

Separate the people from the problem

Calibrating our words (as suggested in the header image), whether in a meeting, in social settings, or in the heat of an advocacy campaign, requires some level of mindfulness, along with an unshakeable commitment to ‘the common good’. Even when provoked by personal attacks, we do no good for the cause we represent if we resort to insults and inciteful words.

The four key principles underpinning the negotiating method recommended in the seminal reference Getting to Yes: Negotiating agreement without giving in (by Roger Fisher and William Ury, Hutchison. 1982) are highlighted in the chart below.

The words we use and the ’emotional’ tone we employ (in written or oral forms) will reflect the extent to which we have internalised the principles recommended by Fisher and Ury. Negative emotions tend to impede effective engagement and the capacity to reach agreement. Conversely, positive emotions tend to enable agreement.

The notion that you can’t argue with an angry person applies to both parties of course. Just as you won’t persuade another person of the legitimacy of your views if they are angry, you won’t budge them if you are angry either.

The emotional dimension of negotiation (and advocacy too I suggest) is the subject of a later book by Roger Fisher, this time with Daniel Shapiro – Building Agreement: Using emotions as you negotiate. Core concepts that motivate people form the central themes in this very helpful sequel.

Beyond the arguments based on effective methods of helping people to better align with your perspectives, there are also of course risk management reasons for avoiding insulting or inciteful language.

Our words and actions need to be insightful rather than inciteful.*

*As noted in a previous post, homonyms are words that sound the same but have different meanings. ‘Insightful’ and ‘inciteful’ are homonyms, but they are also an example of homophones (a subset of homonyms), words that sound the same but have different spellings and meanings.

Trolling and cyberbullying

Public health and other advocates have become victims of trolling and cyber-bullying increasingly of late, particularly since COVID appeared. The UK Centre for Countering Digital Hate (CCDH) recommends the Troll Counterstrategy outlined in the chart below.

If you or your team have been victims of trolling or cyberbullying, seek support from local health and cyber-safety groups. In Victoria, the Better Health Channel offers resources and advice on these issues, including links to mental health helplines.

https://tinyurl.com/3b8w7946

7 Marketing Books to Read

 

Alexey Cherkasov

There is a great saying “The person who doesn’t read is no better off than the person who can’t read”. And a marketer who doesn’t read marketing books cannot be named the Marketer.

A lot of new marketing books appear every month and of course, many of them are quite worthless, but that doesn’t mean that every marketing book is that bad.

I personally try to read at least 2 marketing books per month to keep my mind charged with new knowledge or revise something I’ve learned before and need to give it another try.

I know that reading for many people is as painful as climbing a rock with someone sitting on their back, but once you try to schedule your reading, define some certain time per day to read at least 20-30 minutes, then you’ll see that you’re starting to get more fun and better results.

I’m not going to teach you how to start loving reading, I’m going to share with you 7 great marketing books that you have to read in 2019 to become a better marketer and implement some new marketing things into your business to increase your sales.

UnMarketing: Everything Has Changed and Nothing is Different

UnMarketing shows you how to unlearn the old ways and consistently attract and engage the right customers. You’ll stop just pushing out your message and praying that it sticks somewhere. Potential and current customers want to be listened to, validated, and have a platform to be heard-especially online.

With UnMarketing, you’ll create a relationship with your customers, and make yourself the logical choice for their needs. We know you’ve been told to act like other people, talk like other people, and market like all the people, but it is time for you to unlearn everything and start to UnMarket yourself.

UnMarketing includes the latest information on:

• Idea Creation
• Viral Marketing and Video
• Marketing to Millennials
• Authenticity
• Transparency and Immediacy
• Ethics and Affiliates
• Social Media Platforming
• UnPodcasting
• Word of Mouth
• Customer Service
• Consumer Advocacy and Leadership.

The 1-Page Marketing Plan: Get New Customers, Make More Money, And Stand out From The Crowd

Whether you’re just starting out or are an experienced entrepreneur, The 1-Page Marketing Plan is the easiest and fastest way to create a marketing plan that will propel your business growth.

In this groundbreaking new book you’ll discover:

• How to get new customers, clients or patients and how to make more profit from existing ones
• Why “big business” style marketing could kill your business and strategies that actually work for small and medium-sized businesses
• How to close sales without being pushy, needy, or obnoxious while turning the tables and having prospects begging you to take their money
• A simple step-by-step process for creating your own personalized marketing plan that is literally one page. Simply follow along and fill in each of the nine squares that make up your own 1-Page Marketing Plan
• How to annihilate competitors and make yourself the only logical choice
• How to get amazing results on a small budget using the secrets of direct response marketing
• How to charge high prices for your products and services and have customers actually thank you for it

The Marketing Book: a Marketing Plan for Your Business Made Easy via Think / Do / Measure

This book brings a sense of humor and a strong dose of practicality to business promotion. It’s a book that’s as practical as the competitive Marketing for Dummies 2018 but more fun to read, with not just to-dos but a conceptual framework as what will no doubt be one of the best marketing books of 2019 and no doubt one of the bestselling marketing books of 2019.

Get Scrappy: Smarter Digital Marketing for Businesses Big and Small

Get Scrappy will help you:

• Demystify digital marketing in a way that makes sense for your business
• Do more with less
• Build a strong brand with something to say
• Find inspiration in unexpected places
• Create relevant and engaging content and promote it via Twitter, Facebook, and other channels
• Integrate strategy and message across touchpoints for a unified brand experience-both online and off
• Spark dialogue with your community of customers
• Measure what matters

The book features frameworks, hacks, tips, idea starters, and more. Get Scrappy is the map you need to take your marketing from good to great.

Growth Hacker Marketing: A Primer on the Future of PR, Marketing, and Advertising

A new generation of megabrands like Facebook, Dropbox, Airbnb, and Twitter haven’t spent a dime on traditional marketing. No press releases, no TV commercials, no billboards. Instead, they rely on a new strategy – growth hacking – to reach many more people despite modest marketing budgets.

Growth hackers have thrown out the old playbook and replaced it with tools that are testable, trackable, and scalable. They believe that products and businesses should be modified repeatedly until they’re primed to generate explosive reactions.

This book explains the new rules and provides valuable examples and case studies for aspiring growth hackers. Whether you work for a tiny start-up or a Fortune 500 giant, if you’re responsible for building awareness and buzz for a product or service, this is your roadmap.

Content – The Atomic Particle of Marketing: The Definitive Guide to Content Marketing Strategy

Content – The Atomic Particle of Marketing explores how content functions in the broader framework of all marketing, as well as organizational concerns and IT decision making. It demonstrates the value content brings not only to “owned” media initiatives, such as a company website or blog, but also the essential role content plays in all other marketing initiatives, from social media to advertising to offline channels.

It will enable readers to make the organizational, staffing, tools and process decisions necessary to get content up and running across divisions and organizational silos. Deeply researched and insightful, Content – The Atomic Particle of Marketing is, quite simply, the definitive research-based guide to content marketing.

The Lead Machine: The Small Business Guide to Digital Marketing

In The Lead Machine, you’ll discover a simple, straight-forward method for digital marketing called the BARE Essentials of Digital Marketing. 

• Build – How to create a website that turns visitors into customers.
• Attract – What are the three most effective methods for driving highly qualified traffic to your site.
• Retain – How to stay in contact with prospects long after they’ve left your site.
• Evaluate – How to read and analyze your traffic reports so you can constantly improve your marketing and your conversion rates.

Within each section, you’ll discover the secrets of digital marketing, and how to apply them to your own business. You’ll get answers to questions such as:

• How do I increase my website conversions?
• How can I write more persuasive copy that gets people to take action at my site?
• How do I attract more visitors to my site?
• How do I get to the first page of Google?
• How can I come up in local search?
• How can I uncover which words my customers are using at Google?
• Where do I put my best keywords on my web page?
• What are the best plugins for helping me rank higher?
• How can I use social media to drive traffic to my site?
• What are the most effective social media channels for lead generation?
• How much time should I spend on social media?
• How does blogging improve my visibility online?
• How does a podcast help my business?
• How do I create videos for YouTube?
• How do I attract an audience to YouTube?
• How do I get YouTube viewers to visit my website?
• Does Facebook marketing still work?
• How can I prospect for new business on LinkedIn?
• What other social media platforms should I be using?
• How can I use webinars to build my business?
• How do I advertise on Facebook?
• What other social platforms can I advertise on?
• How can I stay in touch with people after they’ve left my site?
• How do I build an email list?
• What other digital marketing can I measure?
• How do I send out mass mailings?
• How do I install Google Analytics?
• Does my business need to be on Twitter?
• How do I find out what pages are most popular on my site?
• How can I find out what keywords are driving the best traffic?
• How can I determine where there are “leaks” on my website?
• How do I know if any of this is working?​

If you’ve already read some of the marketing books listed above, you can check the reviews of the books I prepared earlier:

• Superhero Marketing: 5 Things To Learn from Marvel vs DC Book
• Marketing Fishing with Habit-Forming Products
• Lateral Marketing by Kotler
• Negotiations according to Tracy
• Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy

https://tinyurl.com/5n6tvjn8

Saul Alinsky’s 12 rules for radicals

 

Saul Alinsky was a very effective organizer and he developed the following rules for getting organized.  It is important to understand all of the tactics that might be called into play on any issue.  These rules are reported many places online but they are repeated here for completeness of this collection.

Here is the complete list from Alinsky.

RULE 1: “Power is not only what you have, but what the enemy thinks you have.” Power is derived from 2 main sources – money and people. “Have-Nots” must build power from flesh and blood. (These are two things of which there is a plentiful supply. Government and corporations always have a difficult time appealing to people, and usually do so almost exclusively with economic arguments.)

RULE 2: “Never go outside the expertise of your people.” It results in confusion, fear, and retreat. Feeling secure adds to the backbone of anyone. (Organizations under attack wonder why radicals don’t address the “real” issues. This is why. They avoid things with which they have no knowledge.)

RULE 3: “Whenever possible, go outside the expertise of the enemy.” Look for ways to increase insecurity, anxiety, and uncertainty. (This happens all the time. Watch how many organizations under attack are blind-sided by seemingly irrelevant arguments that they are then forced to address.)

RULE 4: “Make the enemy live up to its own book of rules.” If the rule is that every letter gets a reply, send 30,000 letters. You can kill them with this because no one can possibly obey all of their own rules. (This is a serious rule. The besieged entity’s very credibility and reputation is at stake, because if activists catch it lying or not living up to its commitments, they can continue to chip away at the damage.)

RULE 5: “Ridicule is man’s most potent weapon.” There is no defense. It’s irrational. It’s infuriating. It also works as a key pressure point to force the enemy into concessions. (Pretty crude, rude and mean, huh? They want to create anger and fear.)

RULE 6: “A good tactic is one your people enjoy.” They’ll keep doing it without urging and come back to do more. They’re doing their thing, and will even suggest better ones. (Radical activists, in this sense, are no different than any other human being. We all avoid “un-fun” activities, and but we revel at and enjoy the ones that work and bring results.)

RULE 7: “A tactic that drags on too long becomes a drag.” Don’t become old news. (Even radical activists get bored. So to keep them excited and involved, organizers are constantly coming up with new tactics.)

RULE 8: “Keep the pressure on. Never let up.” Keep trying new things to keep the opposition off balance. As the opposition masters one approach, hit them from the flank with something new. (Attack, attack, attack from all sides, never giving the reeling organization a chance to rest, regroup, recover and re-strategize.)

RULE 9: “The threat is usually more terrifying than the thing itself.” Imagination and ego can dream up many more consequences than any activist. (Perception is reality. Large organizations always prepare a worst-case scenario, something that may be furthest from the activists’ minds. The upshot is that the organization will expend enormous time and energy, creating in its own collective mind the direst of conclusions. The possibilities can easily poison the mind and result in demoralization.)

RULE 10: “If you push a negative hard enough, it will push through and become a positive.” Violence from the other side can win the public to your side because the public sympathizes with the underdog. (Unions used this tactic. Peaceful [albeit loud] demonstrations during the heyday of unions in the early to mid-20th Century incurred management’s wrath, often in the form of violence that eventually brought public sympathy to their side.)

RULE 11: “The price of a successful attack is a constructive alternative.” Never let the enemy score points because you’re caught without a solution to the problem. (Old saw: If you’re not part of the solution, you’re part of the problem. Activist organizations have an agenda, and their strategy is to hold a place at the table, to be given a forum to wield their power. So, they have to have a compromise solution.)

RULE 12: Pick the target, freeze it, personalize it, and polarize it.” Cut off the support network and isolate the target from sympathy. Go after people and not institutions; people hurt faster than institutions. (This is cruel but very effective. Direct, personalized criticism and ridicule works.)

Marketing Fishing or “Hooked. How to Build Habit-Forming Products” by Nir Eyal and Ryan Hoover

 

In the modern world, manufacturers constantly produce new products, expand the range of existing goods and try to run more effective marketing campaigns. The consumer faces a choice of what kind of goods to buy from the presented variety. In this situation, the main goal of the seller should be not only the sale or marketing of its products, but also the retention of its consumer. In their book, Nir Eyal and Ryan Hoover describe the Hook Model that teaches the basic principles of consumer habits formation in consumers and consists of four stages: trigger, action, reward and investment.

1. Trigger

Trigger is a kind of stimulus that causes a person to want to do something. Triggers are of two types: external and internal.

External triggers are some information that attracts the user’s attention and pushes him to perform the required action.

Types of external triggers:

1. Paid triggers (advertisements, contextual advertising, etc.)
2. Free Triggers (positive responses in the press, popular viral video)
3. Triggers of the relationship (recommendations of friends or relatives)
4. Embedded triggers (always come to the user’s eyes, but he decides whether to pay attention to them).

When consumers have a habit, they are controlled by other triggers-internal. The internal trigger is a certain association fixed in the consumer’s brain and prompting him to act.

2. Action

The second stage of the model is action. After the consumer received the signal, he must perform the action. Here the rule “it is easier to do than to think” is applied. The simpler the action, the more likely it will become a habit.

3. Reward

At stage 3, you reward the user, solving his problems and reinforcing the motivation to perform the required action again.

Three types of variable compensation

– remuneration of the tribe – social reward;

– compensation of extraction – the need to extract material objects;

– internal reward.

4. Investments

The more effort we put into something, the more we appreciate it. We tend to do the same as in the past.

 

Nir Eyal and Ryan Hoover in the book also discuss the ethical application of the Hook Model, since it is associated with a change in human consciousness. For this purpose, the authors propose a manipulation matrix. In order to use the matrix, it is necessary to answer 2 questions: “Would I use this product myself?” And “Will the product significantly improve the life of consumers?”. Answering these questions, you can determine to which type of creators you belong: “helpers”, “hawkers”, “showmen”, “drug dealers”.

After the product is created, then by testing habits you can identify its hot fans, find out what features of the product are addictive and why they do it.

Testing a habit consists of the following steps:

Step 1. Determine. Examine the available data to determine how people behave and how to use the product.

Step 2. Encode. Then systematize the results to identify consumers who have already developed a habit of the product.

Step 3. Change. Change the product to influence more users and push them to the same path as people who have already acquired a habit, then evaluate the results and change the product again.

The “hook” model helps not only to form a habit of a new product/service but reveals weaknesses in an already existing product.

Nir Eyal and Ryan Hoover discuss in detail each step of the model, give concrete examples and cases from advertising and social networks, and also describe some psychological experiments in the field of marketing. The main task of the book is to teach you how to create a habit of the product/service in order to solve the specific problems of the consumer with the help of habit.

Hooked is written for product managers, designers, marketing specialists, start-up founders, and anyone who seeks to understand how products influence our behavior.

https://tinyurl.com/3etrtz7w