Strategic Market Management Global PerspectivesDavid A. Aaker and Damien McLoughlin ISBN: 978-0-470-68975-2 www.wileyeurope.com/college/aaker Copyright 2010 John Wiley if there is only 1/4 as much debt as equity, then the cost of capital will be 14%. Each business aims at ROA to exceed cost of equity so shareholder can improve stock investmentPerformance Measures Reflecting Long-Term ProfitabilityCustomer Satisfaction/ Brand LoyaltyRelative CostBrand/Firm AssociationsProduct/Service QualityNew Product ActivityManager/Employee Capability and PerformanceLong Term ProfitsCurrent PerformanceFigure 7.1Figure 6.1Relative Cost vs. Relative Performance - Strategic ImplicationsMore ExpensiveLess ExpensiveInferiorSuperiorChange Design Manufacturing/Systems IgnoreValue Analysis Raise prices PromoteCost ReductionValue Analysis De-emphasise UpgradeValue Analysis Emphasise/promote Leave it aloneFigure 6.2Our Component isChapter 6 - Internal AnalysisPPT 6-10Strengths and Weaknesses Strategies leverage strengths and neutralize weaknesses Point of advantage vs. points of parity vs. liabilityChapter 6 - Internal AnalysisPPT 6-11Threats & Opportunities Key output of external analysis Evaluate as to: Immediacy ImpactStructuring Strategic DecisionsStrategy Development Strategic Investment Functional Strategies and Programmes Value Proposition Assets and CompetenciesFigure 6.4Organizational Strengths and WeaknessesCompetitor Strengths and WeaknessesMarket Needs, Attractiveness, and Key Success FactorsKey LearningsSales and profitability analysis provide an evaluation of past strategies and an indication of the current market viability of a product line.Shareholder value holds that the flow of profits emanating from an investment should exceed the cost of capital (which is the weighted average of the cost of equity and cost of debt). Routes to achieving shareholder value such as downsizing, reducing assets employed, and outsourcing can be risky when they undercut assets and competencies.Performance assessment should go beyond financials to include such dimensions as customer satisfaction/brand loyalty, product/service quality, brand/firms associations, relative cost, new product activity, and manager/employee capability and performance.Assets and competencies can represent a point of advantage, a point of parity or a liability. Threats and opportunities that are both imminent and important should trigger strategic imperatives, programs with high priority.Ancillary Slides“The successful man is the one who finds out what is the matter with his business before his competitors do.”Roy L. Smith“Its not companies that fail, its their leaders who fail.”Warren BennisSix Rules for Success1. Face reality as it is, not as it was or as you wish it were. 2. Be candid with everyone. 3. Dont manage, lead. 4. Change before you have to. 5. If you dont have a competitive advantage, dont compete. 6. Control your own destiny, or someone else will.Jack Welch former Chairman, General Electric