ABSTRACT
This chapter addresses some key issues with respect to strategic planning and offers insights into how to help a company grow and protect its ability to create profits.
overall implementation • To create an understanding of how to make a company grow and the
Possibly the most important and yet least understood tool in strategic planning is effective market segmentation. Market segments are designed to maximize the use of resources in the production of Throughput and to minimize the risk of a downturn. There are three rules in market segmentation. Market segments should be selected so that
1. The sales price in one market will not impact the sales price in another 2. The same resource base serves all markets 3. It is unlikely that all segments will be down at the same time
The benefit of an effective program is the ability to protect valuable resources and to maximize profitability by manipulating the market to fit capacity instead of manipulating capacity to fit market demand. By manipulating the sales price for products that are made at nonconstraint resources, it is possible to increase product demand and thereby increase demand for time at those resources that are being underutilized. Since the real profit for these products is the difference between the sales price and the cost of raw material, a large amount of profit can still be generated during those times when there is a downturn of demand at some resources.
