Strategic Planning
The roots of strategic planning are in the field of industrial organization, which is about market and industrial structure. The most common market structure is an oligopoly, which has few business firms. However, few can be from as little as two to as many as fifty or more. The larger the number of firms the more competitive is the market. However, while the fewer the number of firms implies the less competitive is the market, the fewer the number of firms the more fierce is the degree of price competition among the competitors which can lead to either a price war (which is the equilibrium outcome), or to price fixing (against the law), or to non-price competition (product differentiation). The problem of strategy is to find a way forward for the firm to not only survive price competition but to thrive. One approach for the firm is to differentiate their products and services from the competition. This provides one generic strategy, called product differentiation, which is also called non-price competition. The second approach for the firm is to innovate their production process to provide a lower cost of production than the competition so that the firm can win at price competition (a price war). In this seminar, we discuss the basics of market and industrial structure and what characteristics of the market structure lead to product competition versus price competition. It should be noted that the profitability of the firm is not a choice of the management of the firm. Profitability of the firm is determined by the industrial structure. How the management of the firm responds to the constraints imposed by the industry structure provided by the strategic plan and in this limited context influences profitability.
The Boston Forecasting Research Institute, Forecasting, Economic Forecasting, Macroeconomic Forecasting, Business Forecasting, Forecasting for Business, Business Planning, Strategic Planning, Business Analytics, Marketing Analytics, Predicitve Analytics, Forecasting Research, Budgeting for Business, Financial Planning for Business, Optimal Budgeting for Business