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Note that a differential benefit does not necessarily mean simply offering something different. Mennen marketed a deodorant with a distinctive feature: It contained vitamin D. Unfortunately, consumers did not see any reason to pay for the privilege of spraying vitamin D under their arms. Despite advertising claims, they saw no benefit and the product failed. The moral: effective product benefits must be both different from the competition and wanted by customers.
In small companies that offer a single good or service, the firm’s business strategy is simple. But many companies realize that relying on only one product can be risky. So they become multi-product firms with self-contained divisions organized around products or brands. These individual businesses or units are called strategic business units. They have their own mission, business objectives, resources, managers and competitors. The main goal for multi-product companies is to best allocate resources among different business units to ensure growth for the total organization.
As a collection of different stocks an investor owns is called a portfolio, the different products owned by a larger firm is called its business portfolio. Diversified portfolio of products with different revenue-generating business units reduces the firm’s dependence on one product or one group of customers.
Comprehension / interpretation
1.What is planning?
2.What is strategic planning aimed at? What level of management is involved in strategic planning?
3.What is tactical or functional planning?
4.What is operational planning? What kinds of decisions are taken at this level?
5.Business planning is an ongoing and integrated process of making decisions that guides the firm both in the short and long term periods.
6.Defining the mission for an organization is the first stage of strategic planning. What is a mission statement?
7.What is SWOT analysis? What factors should a company take into account before deciding on strategies for the future development?
8.Competitive advantage for the firm is the underlying goal for all marketing strategies and plans.
9.Competitive advantage is achieved through identifying a company’s distinctive
competency and differential benefits the company can offer their customers. 10.Companies should focus on what they do best rather than diversify. 11.What is strategic business unit (SBU)?
12.How can a diversified business portfolio reduce the risk in business?
A.You will hear an interview with Marjorie Scardino, Chief Executive of the media group Pearson plc. Before you listen, choose the best definition for
each of the italicized words below.
1.The assets of the company are
a.the customers they have.
b.the things they own.
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c.the markets they are in.
2.If a company improves its cash generation
d.it increases its sales revenue.
e.it has cash available at all times.
f.it invests more in its business.
3.If a company disposes of an asset, it
g.values it.
h.keeps it.
i.sells it.
4.If companies have an authoritarian way of management
j.the management give responsibility to workers at lower levels.
k.the management keep tight control over everyone and everything.
l.the management have many ways of communicating with employees.
5.If you stitch two materials together, you
m.separate them.
n.cut them.
o.join them.
B. Listen to the first part of the interview and make notes. Answer the questions.
1. Before developing a strategy, the management thought about five things. What are they?
2. Their strategy consisted of three simple steps. What are they?
C. Now listen to the second part of the interview. Which of the trends below are mentioned.
1.Companies are becoming more international.
2.Employees are becoming more valued by management.
3.Employees are working more in teams.
4.Management are having more control over staff.
5.Management are changing their style.
D. Answer these questions.
1.What strategies impress Marjorie Scardino?
2.What three points does she make about Coca-Cola’s strategy?
1.Match up the words from the left with the words from the right to make word partnerships. Translate them into Russian.
1) brand |
a) advantage |
2) sales |
b) benefits |
3) business |
c) environment |
4) family-run |
d) activity |
5) market |
e) company |
|
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6) competitive |
f) revenue |
7) production |
g) segment |
8) integrated |
h) units |
9) internal |
i) competence |
10) current |
j) preference |
11) premium |
k) performance |
12) distinctive |
l) price |
13) differential |
m) capacity |
2. a. Match the phrase, describing a position of a company, with their definitions
1) market leader: |
a) with the second largest market share |
2) market challenger: |
A company ….. b) with the largest market share |
3) market follower: |
c) that focuses on a small segment |
|
of the market |
4) market nicher |
d) that is not a threat to the leader |
b. Match the terms meaning different strategies, which companies may use, with their definitions.
1) a takeover
2) a joint venture
3) a merger
4) an alliance
3. Complete the following sentences using suitable words given below.
product range |
sales renenue |
growth rate |
product-line |
|
market share |
production capacity |
resources |
productivity |
|
1.A well-known advertising agency aims to achieve a _____ of 20% a year.
2.This ____ is unprofitable. We’ll have to discontinue it.
3.Companies like Unilever and IBM have huge financial ____ .
4.By re-organizing the work of office staff, you can often increase their ____ .
5.We’re a small firm, so we aren’t able to offer a wide ____.
6.Most of Shell Oil’s ____ comes from overseas subsidiaries.
7.By extending our factory, we have been able to expand our ____ .
8.With the help of their cheap, high-quality word-processor, the Amstrad company were able to greatly increase their ____ in the UK.
4.Phrasal verbs.
Answer the following questions in any way you wish using the verbs in
brackets.
1.What does a firm often have to do if it is not successful in a market? (pull out)
2.What do you do if your main competitor is doing better than you in the market? (work out)
3.After you have made a deal with an overseas agent, what do you usually do?
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(draw up)
4. How can you find out if there will be a demand for a product you wish to develop? (carry out0
5.What can you do if the demand for your products in your home market is saturated? (break into)
5.Complete the following passage with the correct form of the words below. Retell the text. Reveal its main idea.
strategy |
right |
|
underestimate |
venture |
personnel |
|||
finance |
skill |
planning |
be in a rush |
|
drawback |
|||
expertise |
link-up |
marketing costs |
bring in |
set up |
||||
|
delegate |
|
innovative |
trust |
segment |
|
||
The problems of small high-tech firms have attracted a lot of attention recently. Research shows that many of these firms are (1) ____ by talented, creative scientists. Their owners have no trouble with coming up with (2) ____ products but they often can’t build on their early success.
One reason for this is that they don’t have much management (3)____ . Therefore, they are unable to develop the (4)____ which are necessary for their company’s growth. They (5)____ to develop products, and don’t think about how to market them.
When they do try to sell their products, they spend too much time to gain the (6)____
of potential customers. Another mistake they make is to underprice their products so that they have no (7)____ for future development.
Once the firms begin to grow, their owners (8)____the future costs of developing and marketing new products. Lack of financial (9)____ is a major weakness of such companies. It is difficult for high-tech firms to attract the right (10)____ because they cannot offer the same job security as a large organization.
The high-tech firm can get round some of these problems by developing a specialist image. It can aim at a particular (11)____ of the market. Customers then start seeking out this firm, so its (12)____ are reduced. The only (13)____ is that it may take some time before customers accept the firm’s new technology.
As soon as high-tech business has reached a certain size, it will be a good idea to (14)____ professional management. The founder of the firm can then (15)____
responsibilities for activities like marketing and finance. If a high-tech firm needs money very badly, it may arrange a (16)____with a larger company. It will offer that company exclusive (17)____ to its technology.
Enthusiasm, bright ideas, (18)____ capital and technology are not enough to ensure success. Basic management (19)____ – especially financial and marketing ones – are also vital.
6. Read the following case study and then answer the questions
Richard’s bank manager was impressed by his experience and by the business plan he presented. An overdraft facility of $25, 000 was quickly arranged. This, together
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with Richard’s savings of $15, 000, provided the start-up capital for the firm, Computex.
He began by hiring another person to help him develop the components. The two of them spent the next six months producing the type of products they felt the market needed. When they had built up a good supply of components, they started trying to sell them. To Richard’s surprise, however, this proved to be very difficult. Many potential customers seemed to be suspicious of the low prices of the products. Why were they so much cheaper than those of more famous, well-established competitors, they wanted to know. Other customers clearly saw Richard’s company as a newcomer not to be trusted – people who would be here today and gone tomorrow.
It was over a year when Richard got his first order. By that time, he had an overdraft of $40, 000 and no more money to make further supplies of components. He was spending all his time advertising the products, running round to meet customers and trying to persuade them to buy.
Three months later, a few large orders were received, but Richard realized that he would have to wait two months or so before being paid.
At this point, the bank manager lost confidence in the business. He informed Richard that he was calling in the overdraft. “Give me some time to look around for more capital”, Richard said. “All right, I’ll give you a month, but not more,” was the bank manager’s reply.
After rushing about and talking to a lot of people, Richard received firm offers from two venture capital companies. The first was prepared to invest $200, 000 in return for an 80% share of Richard’s business; the second was willing to put up $250, 000 for a 90% share.
This was the situation facing Richard Thomas fifteen months after he had set up his high-technology enterprise.
overdraft – превышение кредита в банке overdraft facility – кредит, денежные средства to call in overdraft – потребовать кредит обратно
1.Could Richard have avoided the situation he now finds himself in? If so, how?
2.What should he do now?
3.What advice should you give him about how to run the company in the future?
4.What problems can arise when someone sets up a new business?
5.Consider Richard’s business, the high technology company. Note down it’s strengths, weaknesses, opportunities and threats.
7.Complete the text below with an appropriate relative pronoun: who, which, where, whose, that. In some sentences you can omit the relative pronoun.
Some tips on starting your own business
Planning is an essential ingredient for a successful business. The type of business