PRIVATE HIGHER EDUCATIONAL INSTITUTION «ALFRED NOBEL UNIVERCITY DNIPROPETROVSK» INNOVATION MANAGEMENT AND INERNATIONAL LOGISTIC DEPARTMENT THE MASTER'S RESEARCH PAPER FORMULATION OF THE ENTERPRISE DEVELOPMENT STRATEGY (BASED ON “LVS” SPE, LLC) Evheniy Korobeynikov MO-09, part-time studies Scientific supervisor: Doctor of Economics, Full Professor, Vladimir Evhenievich Momot Language consultant: Svitlana Anatoliivna Samoilenko Dnipropetrovsk 2015 CONTENTS INTRODUCTION CHAPTER 1 THE THEORETICAL FOUNDATIONS OF A CHOICE OF THE MARKETING STRATEGY 1.1. Methods of analysis of the competitive situation on the market 1.2. The concept of marketing strategy and strategic decision-making model 1.3. Types of marketing strategies, their classification CHAPTER 2 ANALYSIS OF FURNITURE MARKET OF UKRAINE INVIROMENT OF “LVS” SPE , LLC 2.1. Organizational management structure of “LVS” SPE , LLC 2.2. Analysis of technical and economic indicators “LVS” SPE , LLC in 2012-2013 2.3. The Ukrainian furniture market in whole 2.3. The structure of demand for home furniture 2.5. Market share for companies depending on their values CHAPTER 3 ECONOMIC ANALYSIS OF “LVS” SPE , LLC 3.1. SWOT-analysis of “LVS” SPE , LLC 3.2. BCG matrix of “LVS” SPE , LLC 3.3. The positioning of upholstered furniture “LVS” SPE , LLC 3.4. Market competitive map (using data of Market Department of “LVS” SPE , LLC) CONCLUSIONS Slide 2. INTRODUCTION Slide 3. The Object of the research is “LVS” SPE (scientific production enterprise), LLC (Limited Liability Company) and market environment where the company operates. The Subject of the research is justification of the choosen strategy of the company in the process of market planning of its activities and analysis of its competitive position. The Purpose of the research paper is theoretical justification and development of methodical recommendations regarding the choice of marketing strategy according to its competitive position. Objectives of Master's research paper are: defining the place and role of strategy and competitive position of the company in process of strategic market planning; making the comparative analysis and the generalization of existing approaches for justification of the choice of the enterprise strategy on the results of its competitive position analysis; theoretical generalization of modern models of market strategies selection aiming to determine system characteristics, causing assessment of the competitive position of the company; generalization and making additions to the strategies and competitive position of the company in the market; elaboration of a plan of market activities in the context of chosen strategy of the factory and making methodical and practical recommendations for its usage. Slide 4. CHAPTER 1. THE THEORETICAL FOUNDATIONS OF A CHOICE OF THE MARKETING STRATEGY 1.1. Methods of analysis of the competitive situation on the market 1.2. The concept of marketing strategy and strategic decision-making model 1.3. Types of marketing strategies, their classification Distinctive features of enterprise marketing strategy: 1. The process of strategy development is not completed some instant action. Normally it should end the general definition of vectors which will promote and ensure they can increase and improve the position on the market. 2. The current strategy should be used in tandem with the search method, while in developing policies. The role will consist in finding strategy is to first, help concentrate attention on specific areas and opportunities; and secondly, neutralize all other features that serve as incompatible with our strategy. 3. The need for strategic planning fall how promising vector of output the company into a profitable level. 4. In the process of developing the strategy it is not possible to predict all the opportunities that emerged in the design of management measures. That is why you should use generalized not quite complete information about possible alternatives. 5. Once while searching new alternatives are specific, we see the accumulation of more accurate information. In this case, it may question the need for strategic choice in the beginning. This creates the conditions for good communication strategy without using the principles of recoverability. 6. For the selection of measures are used as benchmarks and strategies can being said that this is one and the same, and that the various components. Guidepost acts as a goal to which the company intends to reach, and the strategy is the means in achieving the goal. Guideposts, in is case, are the highest level of decision-making. 7. Guideposts and strategy are interchangeable, as in certain periods of time and at different levels of the enterprise. Certain performance parameters (market niche) in one timeframe perform the role of the guidepost, and in other time will become its market strategy. Slide 5. CHAPTER 2 INTRODUSING THE EXAMPLE “LVS” SPE , LLC Organizational management structure of “LVS” SPE , LLC Director (CEO) Deputy Director for technological Affairs Chief engineer Mechanical engineer The Quality control department Engineer manufacturing equipment Repair and tool division Deputy Director for production Technologist Designer Workshop production Deputy Director for General Affairs Chief book-keper Marketing Department Accountancy Sales Department Planningeconomic Department Warehouse Department Transportati on (Logistic) Department Slide 6. Analysis of technical and economic indicators “LVS” SPE , LLC in 2012-2013 Indicators 2011 net effective income, ths. UAH 2012 Deviations 2012/2011 ths. UAH % 2013 Deviations 2013/2011 ths. UAH % 13809 9297 -4512 -32,67 7073 -6736 -48,78 2212,8 2646 433,2 19,58 3382 1169,2 52,84 6,24 3,51 -2,73 -43,75 2,09 -4,15 -66,51 57,7 102,6 44,9 77,82 172,25 114,55 198,53 987 1003 16 1,62 1003 16 1,62 Production personnel, people 691 710 19 2,75 710 19 2,75 Unit weight of PP, % 70 70,2 0,2 0,29 70,2 0,2 0,29 19,98 13,09 -6,89 -34,48 9,96 -10,02 -50,15 5278,6 4970 -308,6 -5,85 4718 -560,6 -10,62 Capital productivity 2,6 1,8 -0,8 -30,77 1,5 -1,1 -42,31 Depreciation of fixed assets, % 62 64 2 3,23 66 4 6,45 The average annual cost of finished goods inventory, ths. UAH The speed of circulation of goods The duration of one revolution, days The average number of employees, people Productivity 1 employee, ths. UAH The average annual value of fixed assets, ths. UAH Slide 7. CHAPTER 3 ANALYSIS OF FURNITURE MARKET OF UKRAINE Ukrainian furniture market 10% 27% 63% Special furniture Office Furniture Home furniture The structure of demand for home furniture Market share for companies depending on their values 30% 30% 20% 20% 30% 20% 15% 10% 0% 10% 5% Large (220 ths.c.o.) Middle (35 ths.c.o.) 5% Small (less 25 ths.c.o.) 65% CHAPTER 4 ECONOMIC ANALYSIS OF “LVS” SPE , LLC SWOT-analysis of “LVS” SPE , LLC Strengths: 1. the availability of qualified personnel with extensive experience; 2. personnel policy is aimed at finding competent professionals; 3. a positive image of the company to its employees; 4. favorable democratic climate within the company; 5. the tendency of improving strategic planning; 6. favorable terms of raw material supply; 7. systematic development of new products; 8. creative advertising campaign; 9. consumer preferences orientation; 10. a large number of well-controlled distribution channels; 11. high quality of production. Weaknesses: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Opportunities: 1. 2. 3. 4. 5. 6. improving the quality of the product and as a result strengthen market position; increase sales; qualitative improvement of the production line due to new product; the increase in profit; the increased interest in the product from the professionals and potential customers; entering new markets (increase in the share of exports). Slide 8. high personnel turnover; imperfect communication channels within the system; inconsistency development strategy; outdated production equipment; irrational system of stock control; low profitability due to the high cost; inflexible pricing system; internal production problems; lack of resources for proper monitoring of the market; low-budget advertising; deficiencies in the system of economic planning. Threats: 1. 2. 3. 4. high competition; rising prices for raw materials, components, other resources; too high costs; using /copying of new developments by competitors (new models) and selling them at lower prices. Data and calculations for BCG matrix plotting Markets growth rate, % Relative market share of Strategic business unit Market share of Strategic business unit, % 7600 91,5 3 11,13 1190 5100 104,1 0,87 22,98 2500 1105 11500 109,3 2,4 23,04 4 1503 625 7200 106,3 3,06 27,12 5 2271 1102 8400 101,1 1,98 30,64 6 3096 2720 10200 96,2 1,16 30,70 № Strategic business unit Company Sales Volume, ths.units Sales of the leading competitor, ths.units Market Capacity (size), ths.units Interior accessories 1 1690 1182 The Cabinet furniture 2 1127 Bedroom furniture 3 Dining furniture Furniture for living room Soft furniture Product name Slide 9. BCG matrix of “LVS” SPE , LLC Slide 10. Assessment of the quality of the product and the credibility of competitors *Score – the mark given on the basis of the analysis of the consumers reviews on the various trademarks. Furniture Quality Prown Score* 4 Credibility of the company Dival Progress Livs Grand 4 3 2 4 Prown 4 Dival Progress Livs Grand 3 3 3 4 The positioning of upholstered furniture “LVS” SPE , LLC Slide 11. Data for market competitor chart The market share of the enterprise at Soft The rate of increase of market share at furniture market in 2013 (S) % Soft furniture market (Ts) % «LVS» 31,8 98,6 «Livs» 23,1 103,4 «Prown» 11,9 102,3 «Progress» 33,2 99,2 The company: 3% Furniture sales by type Corner sofa 12% 29% Sofa 43% 13% Chair&Softchairs Soft group furniture Bed Structure of the furniture purchasing by type Conclusions • the implementation of the strategy of marketing mix modifications • more effective advertising company • offering customers perfected services • using of methods of price competition • searching for additional markets for new products and new customers Thank you for your attention!