Chapter 2: Developing Successful Marketing and Organizational Strategies

CHAPTER 2: DEVELOPING SUCCESSFUL MARKETING AND ORGANIZATIONAL STRATEGIES

I. Today's Organizations: Kinds, Levels and Teams

A. Kinds of Organizations

1. A business firm is a privately owned organization that serves its customers in order to earn a profit.

a. One goal of a business firm is profit, which is the:

Reward for the risk it undertakes in marketing its offerings.

Money left after a business firm's total expenses are subtracted from its total revenues.

b. Business firms must earn a profit to survive.

2. A nonprofit organization is a nongovernmental organization that serves its customers but does not have profit as an organizational goal.

a. Goals of nonprofit organizations include operational efficiency or client satisfaction.

b. Examples of nonprofit organizations include charities and cooperatives.

The terms firm, company, corporation, and organization are used interchangeably to cover both business and nonprofit operations.

B. Levels of organizations and how marketing links to them

1. Corporate Level

Is the level in an organization where top management directs overall strategy for the entire organization.

Manages a portfolio of businesses, variously termed strategic business nits (SBUs), strategic business segments, and product-market units

This level creates value for the shareholders of the firm, as measured by tock performance and profitability.

2. Business unit Level

Is the level at which business unit managers set direction for their products and markets to exploit value-creating opportunities.

Is more specific at the business level of an organization.

Strategic Business Unit Level. Multimarket, multiproduct firms manage a portfolio of businesses called strategic business units.

a. A strategic business unit (SBU) refers to a subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined group of customers.

b. At the strategic business unit level, managers set a more specific strategic direction for their businesses to exploit value-creating opportunities.

For firms with a single business focus such as Ben & Jerry's, the corporate and business unit levels may merge.

3. Functional Level

Is the level in an organization where groups of specialists actually create value for the organization.

The term department generally refers to these specialized functions, such as the marketing department or information systems department.

At the functional level, the strategic direction becomes more specific and focused.

4. Cross-functional teams

Cross-functional teams, refer to a small number of people from different departments in an organization who are mutually accountable to a common set of performance goals.

Cross-functional conflict can arise because in marketing's drive to implement the marketing concept and increase customer value, other departments may see this as making their jobs more difficult.

To develop new or improve existing offerings, senior management may form cross functional teams, which consist of a small number of people from different departments in an organization who are mutually accountable to accomplish a task or common set of performance goals.

II. STRATEGY ISSUES IN ORGANIZATIONS [LO2]

A. The Business

Organizations exist for a purpose: to accomplish something for someone.

One guideline in defining the company's business: Try to understand the people served by the organization and the value they receive, which emphasizes the critical customer-driven focus that successful organizations have.

Harvard professor Theodore Levitt Marketing Myopia article states that organizations must not define their business and customer focus too narrowly. For example:

Railroads are in the "transportation" business, not the railroad business.

Shaw Brothers is not in the movie business, but rather it is in the business of creating fun and fantasy for customers.

Medtronic is in the "healthcare" business, not the medical device business.

B. Mission

By understanding its core values, an organization can define its mission, a statement of the organization's function in society, often identifying its customers, markets, products, and technologies.

a. Is often used interchangeably with vision.

b. A mission statement should be clear, concise, meaningful, inspirational, and long-term.

c. The Singapore Cancer Society, one of the many charitable organizations, has the following mission statement: "To prevent and control cancer through screening and public education services; To enhance the well-being of needy cancer patients through welfare and patient care services."

d. Some organizations, such as Ben & Jerry's, add a social element to their mission statements to reflect moral ideals.

C. Organizational Culture

a. An organizational culture is a set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization.

b. When corporations merge or are acquired, organizational cultures can collide, often resulting from conflicts in missions and goals.

D. Goals

Goals or objectives (used interchangeably) are statements of an accomplishment of a task to be achieved, often by a specific