Chapter 2: Integrated Strategy

The principal objectives of this chapter are to introduce the concept of an integrated market and nonmarket strategy, introduce the concept of positioning, and provide a framework for the analysis of nonmarket issues and the formulation of nonmarket strategies. The chapter also reinforces the point made in Chapter 1 that managers are responsible for the formulation and implementation of nonmarket strategies. This chapter extends that perspective by focusing on the integration of those strategies with market strategies, as illustrated in Figure 2-1. One natural focal point for this integration is the relationship between market opportunities and the importance of nonmarket strategies, as illustrated in Figure 2-2.

The principal factor restricting the pursuit of market opportunities is government policies. Two other factors are public sentiment and ethics. The section on positioning provides a foundation for nonmarket strategy, but as importantly it affects the set of issues the firm faces. Some of those issues are identified by government and others by the news media, and some are initiated by activists.

Figure 2-5 provides a framework for addressing nonmarket issues. At this point the framework should be primarily used to identify the different stages. The stages are intended both to correspond to managerial decision-making processes and to distinguish between analysis, or thinking ahead, and deciding. The latter involves choosing a strategy to deal with an issue or a developing policy to guide managers in dealing with issues.

It is important to understand that the perspective taken to the issues is that of a firm and its managers attempting to further the interests of the firm. For now, those interests are assumed primarily to be profits. This is tempered by normative considerations based on ethics principles.

Figure 2-5 provides an approach to analysis and decision making in which positive analysis precedes the application of normative principles. Some may be concerned that a normative focus — either in the sense of doing good or of applying ethical principles -- should be the centerpiece of any managerial process. There is considerable support for doing good and also about who has which rights, but there is often considerable disagreement when the focus is specific issues or implementation details. The framework in Figure 2-5 is intended not only to provide an outline for the development of strategies but also to focus on analysis that a manager can use regardless of his or her normative beliefs. That is, even those who might disagree about what is right or good can analyze an issue and attempt to predict behavior and consequences. At this point the objective is to be sensitive to issues with normative dimensions and to the actions those dimensions can motivate in the nonmarket environment.

Case: Personal Watercraft aka Jet Skis

This case is a vehicle for taking the step from the characterization of the nonmarket environment given in Chapter 1 to the formulation of a nonmarket strategy and its integration with a market strategy. Jet skis are a major product success of the 1990s with sales of over $1.2 billion in 1996 and one million units in operation. This success generated a number of nonmarket issues contested by a range of interests in the context of public institutions. The jet ski industry has to address these issues both through market and nonmarket strategies.

Case discussion questions:
1. What are the issues, interests, and institutions in the nonmarket environment of the jet ski industry?
2. Where are these issues in their life cycle and where did the jet ski companies catch the issues?
3. What nonmarket strategy should a jet ski company adopt?
4. What market strategy should a jet ski company adopt?
5. How should they be integrated?