1 OVERVIEW AND EXECUTIVE SUMMARY
INTRODUCTION
In general, textbooks conform to a structure and format designed to facilitate a formal study of the subject. Introductory textbooks are largely descriptive and provide an overview of what is known and accepted about the subject. More advanced textbooks are usually analytical and acknowledge alternative points of view that may challenge the normative theory. Few textbooks adopt the format of ‘bestsellers’ in which the opening chapter summarises the key features of the book as a whole, with the remaining chapters containing the information and evidence that illuminate and support the statement of these distinguishing characteristics.
This point was brought home to me in an article by Mark Uncles (1997) in which he argued for an alternative to the conventional doctoral thesis that follows a widely accepted format in which discussion of the findings is reserved for the last chapter, making it more like a murder mystery than a report of original research. In Mark’s view there is much to be said for presenting the findings first and then describing the evidence and procedures underpinning them. In support of his argument he cites Sobel’s book Longitude in which there is a complete summary of the work in the first chapter but ‘the results are so captivating and compelling that most readers will be more than willing to read on’ (1995).
While few, if any, textbooks attempt this, it is notable that the most widely read management ‘bestsellers’ follow this approach. For example, Hermann Simon’s ‘Hidden Champions’ chronicles the successful strategies of companies that are world market leaders but largely unknown to others outside of their industry (2009). In the opening chapter he introduces 46 such companies, and describes their defining characteristics, the basis of
their success and the lessons to be learned from them. By the end of the chapter a convincing case has been made, but it raises a number of specific questions each of which then becomes the subject of a separate chapter which examines them in detail.
In addition, one of the several reviewers commissioned by the publisher to advise on the preparation of a new edition of this book offered the opinion that the summary of lessons to be learned presented in each chapter would have made a good introduction to the book as a whole and might be more effective than leaving it to the end of the book. In light of this example and advice I have decided to adopt a similar approach in preparing this fifth edition of my own attempt to capture and explain what marketing strategy and management are all about. By adopting this approach I hope that the first chapter will provide a synoptic overview of the scope and coverage of the book as a whole that will be useful to those seeking a general survey of the subject as either an introduction or a reminder. And, for those with interest in a specific topic it will indicate where this ‘sits’ in relation to other aspects of marketing strategy and management and where to go for explicit treatment of it.
As well as providing an overview of the content of the book as a whole, the new structure suggests that the content can be fairly readily adapted to the needs of the reader. Reviews of the manuscript indicated that the comprehensive nature of the text was seen as an important strength. However, the result is a large book that may be potentially offputting for students, especially where their curriculum does not call for coverage of all the topics that have been included, as well as practitioners accustomed to more concise written documents.
As the title of the chapter indicates, this is both an overview and an executive summary in which a
OVERVIEW AND EXECUTIVE SUMMARY 1
synopsis of each chapter/topic is clearly identified. So, if you read all of this chapter, you will be introduced to each of the topics and given a summary of what are seen as the most important issues associated with it, together with specific advice on their application in practice. You can then decide which of the more detailed accounts to consult for additional and supporting information and analysis. The presentation is also sequential and subdivided into four parts each of which deals with a group of closely related themes – Part I, Strategy Issues; Part II, Research and Analysis; Part III, Managing the Marketing Mix and Part IV, Implementing Marketing. Accordingly, each Part may be considered as a separate module suitable for study in its own right. Similarly, if topics like Branding, International Marketing, Innovation and New Product Development are available as separate subjects for study in a course, then these chapters can be skipped over.
Some reviewers of the manuscript observed that it would be helpful to include more recent, that is, post2000 references. Where appropriate we have done this but we would remind the reader that references cited in the text are intended to identify original sources that were often the catalyst for the emergence of new themes that developed into specialised subfields in their own right. My intention is to select those seminal works that are the foundation of the marketing discipline and not be distracted by more recent research publications unless they significantly add to the narrative and analysis. In doing so one has to distinguish between recency and relevance, as well as accepting that one cannot possibly keep on top of developments in every subfield. For those who wish to dig deeper we have included Recommended Readings, most of which contain extensive referencing and bibliographies about a chapter topic.
In sum, it is really down to the user and/or instructor to “pick and mix” to suit their own needs.
One final comment before we start. There are many other books that offer a more focused examination of specific issues or, alternatively, a more comprehensive and extended treatment. We shall refer to many of these while attempting to steer a middle course that distinguishes what is important and why and illustrating the application of this understanding to practical issues of who, how, where and when. So, for example, if you want a clear, authoritative and balanced description of the “tools” available to the practising manager, their advantages and disadvantages, strengths and weaknesses, then I recommend that you look at Key Strategy Tools by Vaughan Evans (2013) where you will find 88 entries including quite a few that we do not deal with.
MARKETING’S DOMAIN
Given the ever increasing availability of information it has become commonplace to summarise the content of a communication so that one can decide whether it is of potential interest or not. To facilitate this most written reports and texts are introduced by means of a Foreword, Preface, Abstract or, in the case of management information, an Executive Summary. Accordingly, in this new edition it has been decided to attempt to summarise the key issues/conclusions associated with specific topics that are the subject of chapters dedicated to them.
To begin with it is important to attempt to define the nature, scope and (current) boundaries of the field of study – what academics often refer to as its ‘domain’ –as a basis for establishing what may be learned from reading about it. In doing so, however, authors will make assumptions about the information needs of prospective readers that will depend upon their existing knowledge, experience and the reason that they are considering reading a ‘textbook’ in the first place. To cater for these differing needs the safest approach is to attempt a comprehensive coverage of the field of study but leave it to the reader to decide on and select the particular content that meets their needs. But, the selection of topics, the order in which they are presented and their content follow a logic decided on by the author, so it will be useful to summarise the stages of the historical timeline associated with the evolution of marketing leading to its current status and the challenges that it faces.
1. Human progress and civilisation evolved from the realisation that task specialisation and the exchange of surpluses would increase choice and well-being.
2. The development of markets and the creation of a medium of exchange both facilitated and accelerated the pursuit of specialisation and productivity.
3. Early producers interacted closely with their customers and so understood their requirements precisely.
4. Innovation and the application of technology lead to an Industrial Revolution in the 18th century and a massive increase in output, underpinned by new methods of transportation and distribution. It also resulted in a physical separation between producer and consumer and the creation of a psychological distance between them that needed to be bridged by alternative means of communication including market research and advertising.
5. Increased prosperity, accompanied by advances in medicine, sanitation and public health, resulted in rapid population growth with a concomitant increase in demand in the industrialised countries.
2 MARKETING STRATEGY AND MANAGEMENT
6. To meet domestic demand, new raw materials and commodities had to be imported in exchange for manufactured goods giving rise to the development of international trade and colonisation during the 19th century.
7. During the early 20th century supply capability began to outstrip effective demand and producers had to develop new strategies and techniques to motivate customers to buy their output.
8. The Second World War resulted in a huge backlog of demand and a period of post-war reconstruction. As demand levelled off in the mid-to-late 1950s producers faced increased competition due to excess supply and realised they had to make what they could sell, based on a better understanding of customer needs, rather than work harder trying to sell what they could make. Customer sovereignty (demand) was recognised as the foundation for future business decisions and success (the marketing concept).
9. But the emphasis in management thinking and literature still remains on what the supplier needs to do to achieve success. Only marketing gives equal attention to both demand (customers) and supply, although the ‘Marketing Management’ school of thought tends to emphasise what marketers can do to customers rather than for them.
10. Economic, social, technological and political developments associated with a wave of newly industrialising countries in the 1970s and 1980s, followed by the emerging BRIC economies in the 90s and 00s, have transformed competition through globalisation, the Internet and the empowerment of customers through social media.
11. The environmental effects of economic growth in terms of sustainability and climate change and their impact upon the well-being of all the world’s people call for a new transformational model of social business based on the principles enshrined in the marketing concept.
ETHICS, MORALITY AND MARKETING
Over 30 years ago, when preparing the first edition of this book, as Dean of the Strathclyde Business School I was approached by our new Vice-Chancellor who wished to know why there were no courses in Ethics in the business school curriculum. My reply at the time was that ethical principles were infused into all our teaching and that to offer a stand-alone course in the subject might make it appear as if it was some kind of optional extra. If approached today I would hope to be able to reply that not only were ethical concerns incorporated into all our
subjects but that, in addition, we also required students to take a compulsory class in Business and Society in which the emphasis was upon the ethical responsibilities of business and its role in society.
One does not have to look far to see the events that have occurred since the publication of the last edition to understand this apparent volte face.
Clearly, it would be wrong to lay all the blame at the door of the banking profession, after all if there had not been many gullible and greedy consumers, who seemed to assume that if they had to repay their loans this would be easily accomplished out of the ever increasing returns on investment in property, there would have been no financial crisis. On the other hand, as more and more cases of banks mis-selling products to customers surface, it is becoming increasingly apparent that the banking profession grossly abused its reputation for prudence and probity on which the trust of their customers was based.
Some might argue that ‘marketing’ should also bear some of the blame in that promotion and selling actively encouraged consumers to live beyond their means. But this is not the same as proving that marketing is responsible for market imperfections, just as the mis-behaviour of some bankers is an argument against the principles of banking and the need for a banking system.
So, what is the issue and what caused the ‘crash’? Essentially it was due to a lack of regulation to ensure that the banks conducted their business in an ethical and responsible way. In turn this raises the question as to who was responsible, to which the answer must be bankers themselves and the public bodies established to monitor and oversee their corporate behaviour.
A distinguishing feature of all professions is a desire to regulate practice of that profession and, specifically, the conduct of its members based on the argument that, due to the highly specialised nature of their work, professionally qualified members are most suited to determine what may be regarded as acceptable conduct and behaviour. In the case of certain ‘closed’ professions like medicine, self-regulation is a prized privilege, but in the majority of professions practice is not restricted to the members of the professional body, making it necessary for legislation and other forms of regulation to prescribe and enforce codes of conduct.
In case you are wondering where this is all going, the point is that marketing, like banking, is an established profession that satisfies all of the criteria expected of an occupation or practice claiming this status.
Modern professions have largely evolved from fulltime occupations that marked the adoption of task specialisation as a more effective basis for the organisation of human activity. Over time many occupations became
OVERVIEW AND EXECUTIVE SUMMARY 3
more specialised and a distinction began to develop between ‘trades’ and professions. Perhaps the most obvious distinction was that mastery of trades was largely acquired through experiential learning as an apprentice under the guidance of a craftsman, whereas in the case of professions a body of knowledge developed that could be communicated by means of formal instruction in schools, colleges and universities. (In the USA the acid test for the recognition of a new academic discipline is that the subject be offered in the curriculum of at least eight major universities).
Both trades and professions recognised the importance of collaboration and this led to the formation of associations at both the national and international level. Similarly, both types of association developed codes of conduct to govern practice and behaviour of their members backed up by disciplinary codes. In the case of professions these were reinforced by the publication of ethical codes which, in turn, enabled members to assume responsibility for the regulation of their own profession and exclusion from practice by non-members.
In the UK there are many professional bodies that have satisfied the stringent requirements of the Privy Council and been awarded a Royal Charter that confers Chartered status on practitioners admitted to the professional body. However, in only a minority of cases have ‘licensing laws’ been established, making it a requirement that only chartered practitioners may fill certain roles. The obvious outcome is that only those practitioners who are members of a professional body are subject to its code of conduct and a disciplinary action if they breach its requirements. As for the rest, they can behave as they choose always provided that they act within the law.
Thirty years ago most persons embarking upon a career in banking would have expected to take the examinations of the Institute of Bankers and become members. Today, I suspect that it is a minority. In the case of marketing, as a Trustee of the Chartered Institute of Marketing, I know that there are approximately half a million persons in marketing-related jobs in the UK of whom about 5% are members of CIM and subject to its code of practice. The implications are clear. Either you license professions and require the professional bodies to regulate practice or else you set up other regulatory bodies to perform the same function. As with most things a combination of both approaches might be most appropriate under which professional bodies monitor the performance of individuals while other organisations like the FSA monitor the behaviour of organisations. However, what has become abundantly clear is the need to satisfy point 6 of the Wikipedia milestones and articulate codes of professional ethics and the means of enforcing them.
In the preceding section we proposed a ‘historical timeline’ and suggested that we have arrived at a stage which calls for ‘a new transformational model of social business based on the principles enshrined in the marketing concept’. Given that this is an advanced text book there is an implicit assumption that readers will have been introduced to the ‘marketing concept’ in an introductory course. In my view the distinction between the marketing concept, a marketing orientation and the practice of marketing is both clear and straightforward.
The marketing concept is what I regard as a philosophy of business under which individuals and/organisations freely enter into exchanges with others to their mutual benefit. In other words it is a business model founded on cooperation and collaboration that leads to a win-win outcome with both parties securing the values and benefits they desire to the extent that they develop trust in each other and would gladly repeat the experience if the need arose. A marketing orientation implies that supply should be subservient to demand. If you want to establish what goods and services have the greatest potential to deliver values and benefits, then you should start by engaging in a dialogue with your intended customers to work out what will satisfy the customer’s requirements. As for marketing practice and management this embraces all the activities necessary to initiate and maintain a dialogue between suppliers and customers and the creation and delivery of the satisfying experiences to the mutual advantage of both parties. Put another way marketing depends upon mutual respect and ethical behaviour and so should conform to the Golden Rule – ‘Do unto others as you would be done by’. From time to time, we shall return to this proposition and conclude this overview of marketing strategy and management with the conclusion that marketing insight, ideas and practice offer the best hope for the enhancement of human welfare and the achievement of a high standard of living for all.
In my view, marketing is the discipline best suited to achieve this transformation through identification of the strategic issues and their analysis enabling the formulation of action plans and their effective implementation. In pursuit of this objective, we start with a series of chapters that summarise the strategic issues and current views about them to provide both background and a framework for the development of action plans.
To provide a perspective of the book as a whole, Chapter 2, Marketing and Corporate Strategy, seeks to establish the point of departure by defining the development of the marketing orientation and the nature of marketing strategy, and comparing the latter with the broader concept of corporate strategy. The conclusion
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is that the two are very similar, although marketing strategy may be seen as a subset of corporate strategy responsible mainly for anticipating and planning. The larger concept embraces issues of organisation design and control which go beyond marketing per se. Then, it is proposed that there is only a small set of strategic options open to the decision-maker and these are defined as a backcloth for an examination of basic marketing strategies. The chapter concludes with a statement of the functions of marketing management – analysis, planning, implementation and control – which serves as an introduction to the extended treatment of the topics in the remainder of the book. The key ‘takeaways’ from this chapter are:
WHAT IS MARKETING?
Throughout its evolution the objective and purpose of marketing may be defined as being:
‘The creation and maintenance of mutually satisfying exchange relationships’.
The essence of this definition is that two entities –individuals and/or organisations – voluntarily enter into an exchange of goods or services that adds value (satisfaction) for both to the extent that they will be willing to repeat the experience if the need arises.
In the opinion of marketers, recognition of the need to establish closer contact with the customer predicates the adoption of a marketing approach, which may be summarised as consisting of the following basic steps:
1. Identification of a need which can be satisfied profitably within the constraints and opportunities represented by the potential supplier’s portfolio of resources, and which is consistent with the organisation’s declared objectives
2. Definition of a particular segment or segments of the total demand which offers the best match with the producer’s supply capabilities (the target audience)
3. Development of a specific product or service tailored to the particular requirement of the target audience
4. Preparation of a marketing plan specifying the strategy to be followed in bringing the offering to the attention of the target audience in a way which will differentiate it from competitive alternatives (The main elements of such a plan will comprise pricing, promotion, selling and distribution policies)
5. Execution of the plan
6. Monitoring of the results and adjustment as necessary to achieve the predetermined objectives
Collectively these activities constitute the objectives of marketing strategy, and encompass the responsibility of marketing management. All of them will be dealt with in greater detail in later chapters.
STRATEGY
Corporate strategy is the pattern of major objectives, purposes or goals, and essential policies and plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in, and the kind of company it is or is to be.
Strategic decisions at the corporate level are concerned with acquisition, investments and diversification, that is, the management of a portfolio of businesses or Strategic Business Units (SBUs).
At the business or SBU level, strategic decisions focus on how to compete in an industry or productmarket. Business-level strategy deals with achieving and maintaining a competitive advantage. Strategic decisions at the business level are concerned with selecting target market segments and determining the range of products to offer.
It is with these issues that this book is concerned.
Probably the most ‘popular’ basis for formulating marketing strategy is known as the ‘resource-based approach’. Proponents of this view consider the successful firm as a bundle of somewhat unique resources and capabilities. If the firm’s core capabilities are scarce, durable, defensible or hard to imitate, and can be closely aligned with the key success factors of target markets, they can form the basis of sustainable competitive advantage and profit. The central focus of the approach is on developing those core capabilities that will be effective in various possible market segments and in several different possible futures.
This process of matching resources with opportunity comprises six basic steps:
1. Developing scenarios – Chapter 5
2. Macro environmental analysis – Chapter 7
3. Customer analysis – Chapter 8
4. Industry and competitor analysis – Chapter 9
5. Internal analysis – Chapter 10
6. The development of strategic alternatives – Chapter 11
BASIC MARKETING STRATEGIES
At a very simple level we can isolate three basic marketing strategies – undifferentiated, differentiated and concentrated.
An undifferentiated strategy exists when the supplier offers the same or undifferentiated product to all persons/ organisations believed to have a demand for a product of that type. Three sets of circumstances immediately suggest themselves as being suited to an undifferentiated strategy:
1. The introduction of an innovation
2. The mature/decay stage of the product life cycle (PLC)
OVERVIEW AND EXECUTIVE SUMMARY 5
3. Commodity marketing where the conditions most closely approximate the economist’s model of perfect competition.
A differentiated strategy exists where the supplier seeks to supply a modified version of the basic product to each of the major subgroups which comprise the basic market. (Methods for segmenting markets are discussed at some length in Chapter 12.) In doing so they will develop a different marketing mix in terms of the product’s characteristics, its price, promotion and distribution, although attempts will often be made to standardise on one or more of these factors in the interest of scale economies (usually distribution, e.g. car dealerships, consumer durables, etc.). Such differentiation is only possible for very large firms that can achieve a sufficient volume in each of the segments to remain competitive.
For the smaller producer, a concentrated strategy may be the only realistic option. Under this option, the producer selects one of the major market segments and concentrates all their efforts upon it
In one of the early standard texts, Business Policy, that was a foundation for much of the later work on corporate and marketing strategy, Learned et al. (1965) identified a number of criteria that could be used when evaluating a strategy. Effectively these remain the same and may be summarised as:
1. A strategy must be clearly identified and understood by all the organisations’ stakeholders.
2. The strategy must exploit the environmental opportunities available to the organisation.
3. The strategy must take full advantage of the organisations’ strengths and resources.
4. The strategy must be internally consistent, for example a ‘push’ strategy would be driven by personal selling, whereas a ‘pull’ strategy depends heavily on advertising and promotion.
5. A strategy must be able to satisfy a comprehensive and stringent risk assessment.
6. A strategy must be able to appeal to and satisfy the values and aspirations of stakeholders.
7. The strategy must engage fully the efforts of all those involved in its delivery.
8. The strategy should do no harm and make a positive contribution to society.
9. On implementation a strategy must be carefully monitored to ensure it is achieving the desired outcomes or else modified appropriately.
It is notable that concerns for environmental and social factors, corporate social responsibility and the importance of creating a sustainable competitive advantage
based on the organisations competencies are not quite as novel as some recent writers imply.
The traditional marketing mix, based primarily on the 4 Ps of Product, Price, Place and Promotion, is seen as the means of making contact with buyers through transactions. The challenge is to convert these into relationships and give rise to the emphasis on customer relationship management (CRM). Mistakenly, the marketing management school continues to interpret this as ‘doing things to customers rather than doing things for them’. As Jain observed:
While CRM is absolutely necessary to gain competitive advantage, most firms have failed in launching a successful CRM program because CRM has been practiced as a technical rather than as a marketing concern. The customer should be the focus of any CRM exercise.
In my view this will only occur when we can escape from the old marketing management paradigm, realise that marketing need not be a zero sum game with winners and losers, and subscribe fully to the marketing concept, with its philosophy of ‘mutually satisfying exchange relationships’. Evidence of a move towards this philosophy is apparent in the increased attention being given to a belief in corporate social responsibility and the needs of all stakeholders.
In other words, the essence of marketing a proposed in our 1975 definition.
Chapter 3 Marketing and Competition. Beginning with a definition of ‘competition’ and the role it performs in ensuring that scarce resources are used to maximise satisfaction, we then examine the role which marketing plays in this process. The concept of ‘market structure’ is then introduced both as a consequence of and as an influence upon the conduct and performance of firms in competition with one another. The concept of international competition is then introduced and supported by an extended review of Michael Porter’s discussion of The Competitive Advantage of Nations (1990). Next, we offer a broadly based assessment of the contribution of marketing to competitive success and conclude with an assessment of what will be necessary to compete successfully in the future – essentially a knowledge-based, learning organisation. Key ‘takeaways’ include:
● Marketing is a discipline like architecture, engineering and medicine that integrates or synthesises knowledge and insights from other ‘single’ disciplines as a basis for professional practice.
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● ‘Competition is one of society’s most powerful forces for making things better in many fields of human endeavour. Competition is pervasive, whether it involves companies contesting markets, countries coping with globalisation, or social organisations responding to societal needs. Every organisation needs a strategy in order to deliver superior value to its customers’. (Michael Porter, 2008, xi)
● Traditional notions of competitive advantage need to be supplemented with views from relational and resource-based theories. Sources of competitive advantage may well lie outside firms’ boundaries. The fields of strategy, organisational theory and marketing have several distinct and interrelated explanations. Eight themes are examined for their central orientations, assumptions and implications. These are distinctive in some senses and overlapping in others. What may be needed is an integration of the different ideas to form a coherent and complete model that is workable.
● The traditional view of the industrial economist is that the structure of a market has a major influence on the conduct of firms competing in that market and that this governs their performance –what is generally referred to as the structure, conduct, performance model. On analysis, however, it is clear that the conduct of firms may have an effect upon market structure, for example, through merger and acquisitions, as may the actual performance of the competing firms, for example, more successful firms will increase their market share which will impact upon other firms in the industry. Irrespective of the causality it is clear that careful analysis of the three factors – structure, conduct and performance – is an essential prerequisite to understanding the nature and operation of markets and the development of effective strategies to compete within them.
● While the theory of markets and competition proposes that managers and investors will seek to pursue those opportunities that offer the best returns, in practice this rarely happens.
● Michael Porter (2008) distinguishes five basic forces that govern competition in an industry – the threat of new entrants, the threat of substitution, the bargaining power of suppliers, the bargaining power of customers and rivalry between current competitors (Porter, 1985).
● Developments in transportation and communication have resulted in globalisation and greatly increased international competition. (These are dealt with in detail in a new Chapter 19.)
● Ultimately, only companies can achieve and sustain competitive advantage based upon innovation that involves the entire value system, sustained through relentless improvement, supported by continued investment and a global approach to strategy.
● While there is a great deal of advice on how to achieve competitive success there are no magic bullets. On the assumption that managers follow this advice (as contained in this book) it becomes clear that ultimately it is the quality of the implementation that will determine the outcome.
● The development of a sustainable competitive advantage depends upon one or more of three things:
1. Changing the basis of competition
2. Redrawing the boundaries between industries
3. Creating entirely new industries and depends on the identification and deployment of core competences in a learning organisation with a strategic architecture.
● A competence is a bundle of skills and technologies rather than a single discrete skill or technology … A core competence represents the sum of learning across individual skills sets and individual organisational units.
● A learning organisation is one skilled in acquiring, creating, transferring and retaining knowledge –as well as transforming that knowledge into improved performance or innovative products and services.
● Strategic architecture is basically a high-level blueprint for the deployment of new functionalities, the acquisition of new competencies or the migration of existing competencies, and the reconfiguring of the interface with the customers. (p. 118)
● Hamel and Prahalad (p. 121) go on to say:
A strategic architecture identifies ‘what we must be doing right now’ to intercept the future. A strategic architecture is the essential link between today and tomorrow, between short term and long term. It shows the organization what competencies it must begin building right now, what new customer groups it must begin to understand right now, what new channels it should be exploring right now, what new development priorities it should be pursuing right now to intercept the future. Strategic architecture is a broad opportunity approach plan. The question addressed by a strategic architecture is not what we must do to maximize our revenues or share in an existing product market, but what must we do today, in terms of
OVERVIEW AND EXECUTIVE SUMMARY 7
competence acquisition, to prepare ourselves to capture a significant share of the future revenues in an emerging opportunity arena.
Chapter 4 Principles of Strategic Marketing Planning (SMP) looks first at the evolution of management systems and the role of mission, vision and strategic intent before moving to the heart of the issue by proposing definitions, a framework for SMP and some basic principles to be observed in developing and implementing a strategic marketing plan. It is then argued that the need for SMP is continuous, in the sense that every innovation contains within itself the seeds of its own destruction, and will increase the user’s awareness and expectations which will prepare the way for new and improved substitutes. Thus marketers need to formulate strategy in terms of the underlying needs and satisfactions of customers rather than the specific products or services which serve as the means of delivery of these satisfactions. Equally they must be sensitive to the inevitability of change summarised in the concept of the product life-cycle (PLC), an analysis of which leads to a proposal to use it as a key element in the process of SMP.
Key takeaways include:
Strategic management implies a number of distinctive characteristics which may be summarised as the following:
1. It involves a proactive rather than reactive approach.
2. It is a deliberate self-aware style of management in which managers ‘plan to plan’.
3. It is a style of management characterised by ‘rationality’.
4. It sees strategy as providing a framework within which later policies and specific decisions will be made.
5. It involves being able to ask (and answer) the questions: What are we trying to do? Why? How will we know when we’ve done it?
6. It requires managers who look further ahead, can see the broad picture, are more analytical and emphasise the need for choice.
7. It stresses the need for choice in terms of alternative futures, priorities between objectives and the generation of options.
8. It requires close attention to the implementation and monitoring of innovative policies and courses of action.
9. It involves an understanding of and sensitivity to trends in the larger environment.
Over the past 40 years the concept of long-range strategic planning has changed into an increasingly short-term
mechanical and specialised process which has led to its own self-destruction. Such a process is familiar to the student of evolution, for it is clear that while specialisation (i.e. adaptation to the prevailing conditions) may lead to above-average short-term rewards, it also puts you at greatest risk if you become so specialised that you cannot accommodate or adapt to a change in the environment. In that ‘survival’ is generally accepted as the primary object of all organisations, it is clear that shortterm gain is only to be pursued if it is consistent with the long-term goals of a firm and does not reduce the firm’s ability to respond to turbulence in its environment. We are thus faced with the paradox that while ‘planning’ has fallen into disrepute for leading us into the present impasse, it is also seen as offering the greatest potential for escaping from it.
While there are many definitions of strategic planning that may differ in the particular, there does appear to be a common thread, which is that SMP is concerned with establishing the goal or purpose of a ‘strategic business unit’ or SBU, and the means chosen for achieving that goal. A Strategic Business Unit – or Strategy Centre – is a business area with an external marketplace for goods and services, for which management can determine objectives and execute strategies independent of other business areas. It is a business that could probably stand alone if divested. Strategic Business Units are the ‘natural’ or homogeneous business of a corporation. Smalland medium-sized enterprises (SMEs) that comprise over 90% of all business units are all SBUs.
The development of a strategic plan starts with the articulation of an organisation’s Mission that define its character, identity and reason for existence; its Vision –the kind of organisation it aspires to be; and its ‘Strategic intent’ that envisions a desired leadership position and establishes the criterion the organisation will use to chart its progress. While there is debate about which term defines these different attributes, agreement about them is critical for the formulation of clear Objectives A useful acronym used when developing objectives is SMART, which stands for Specific, Measurable, Achievable, Relevant, Targeted and Timed.
According to management consultant Arthur D. Little the strategic planning process centres on five principles:
1. Strategic business units or ‘strategy centres’.
2. Planning is a data-based activity.
3. Business is not random; it is shaped by competitive economics.
4. There is a finite set of available strategies for each business unit.
5. Strategy selection should be condition-driven not ambition-driven.
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And a formal plan should cover all the following:
Are you getting these essential deliverables from your strategic marketing plan? Take the marketing health check
Market structure and segmentation Score out of 10
● Is there a clear and unambiguous definition of the market you are serving? [ ]
● Is it clearly mapped, showing product/service flows, volumes/values in total, your shares, decision-makers and critical conclusions for your organisation? [ ]
● Are the segments clearly described and quantified? These must be groups of customers with the same or similar needs, not sectors or demographic groups. [ ]
● Are the real needs of these segments properly quantified, with the relative importance of these needs clearly identified? [ ]
Differentiation
● Is there a clear and quantified analysis of how well your company satisfies these needs compared to competitors? [ ]
● Are the opportunities and threats clearly identified by segment? [ ]
Scope
● Are all the segments classified according to their relative potential for growth in profits over the next three years and according to your company’s relative competitive position in each? [ ]
● Are the objectives consistent with their position in the portfolio? (volume, value, market share, profit) [ ]
● Are the strategies (including products, price, place and services) consistent with these objectives? [ ]
● Are the key issues for action for all departments clearly spelled out as key issues to be addressed? [ ]
Value capture
● Do the objectives and strategies add up to the profit goals required by your company? [ ]
● Does the budget follow on logically from all of the above, or is it merely an add-on? [ ]
TOTAL
Health Check Guidelines
Scoring guideline:
● 10 – totally
● 8–9 – well on our way
● 6–7 – more than half way there
● 5 – partially
● 3–4 – started, but still a fair way to go
● 1–2 – started, but not really got to grips with it
● 0 – not at all
Results guideline:
● 100–120 – stunning, world class; just check you read the questions properly and answered them honestly.
● 80–99 – good performance, the focus now is on the areas of weakness to make you truly world class.
● 60–79 – an urgent need to address these key tasks.
● 40–59 – dire, but if the competition are as equally bad the future could be brilliant, there’s not a moment to lose.
● <40 – desperate, we have to hope the competitors are asleep and keep asleep while you tackle these key tasks.
SOURCE: © 2013 Malcolm McDonald International Ltd. All rights reserved. Reproduced with the permission of the Author
OVERVIEW AND EXECUTIVE SUMMARY 9
A review of attitudes towards the use of strategic planning covering a period of 30 years or so suggests that while managers continue to attach importance to the process it is frequently less effective than it might be for a variety of reasons identified by research into its implementation.
Chapter 5 Analytical Frameworks for Strategic Marketing Planning builds upon the foundations introduced in Chapter 4 and suggests techniques and procedures for implementing SMP. To begin with we look at demand curves and the product life-cycle (PLC) concept. We propose that the latter provides a highly useful framework for organising our thinking about the evolution of products, firms and industries, and the appropriate strategies and tactics associated with the phases of birth, growth, maturity and decline. The inevitability of this progression prompts the view that an organisation should seek to develop a portfolio of products which are at different stages of the cycle and so ensure the firm’s long-term survival. Despite some criticism, we believe the growth-share matrix is both valuable and important. Key takeaways include:
1. The inevitability of change is implicit in the PLC concept.
2. It underlines the importance of having a portfolio of products at different stages of development.
3. It requires formal consideration of the competition and their relative standing.
4. It is intuitively appealing and simple to implement conceptually despite the difficulty of operationalising it in practice.
The ideas of the product portfolio and portfolio analysis may be extended to examine analytical approaches developed by successful companies such as Shell and GEC, and the techniques of gap, scenario and SWOT analysis. A similar approach is described in ‘Baker’s Box’ as an introduction to the ideas of segmentation, targeting and positioning which are the subject of extended treatment later in the book (Baker, 2006).
Strategy analysis methods have the potential to engage management and develop a shared understanding of strategic processes as well as providing a common language and a logical structure that can be used to:
● Isolate areas where critical information is lacking
● Communicate judgements and assumptions about strategic issues
● Facilitate the generation of alternatives to be given detailed consideration
● Identify trade-offs involved in undertaking various strategic alternatives These benefits are primarily realised during the early stages of the planning process within a division or
strategic business unit. The strategy analysis methods have virtually no role in later stages of implementation and monitoring. Key takeaways include
1. There is a number of organising frameworks, procedures and techniques designed to assist planners to impose structure upon the complex and multidimensional problems they wish to solve.
2. The selection is eclectic not comprehensive and based on the belief that simplicity is to be preferred to complexity.
3. In the final analysis the techniques are aids to decision-making not substitutes for it.
Chapter 6 Marketing Intelligence – Research for Marketing was placed much later in earlier editions as an element of the marketing mix, and a specialised aspect of the management of the marketing function. Experience with using the text suggests that it would be more appropriate to discuss research methods used in marketing before exploring the kinds of data the manager requires in developing a focused marketing strategy and plan. The chapter opens with a discussion of the factors that create particular difficulties in seeking to apply formal analytical procedures to marketing decisions, namely:
● Many marketing problems are more or less unique.
● Buyers can think for themselves.
● Most marketing problems are very complex.
To help overcome these difficulties, it is argued that the first step must be to establish just what information is available or may be acquired, to assess its worth, and then combine it with one’s own experience and judgement to reach a decision. A review of sources of secondary and primary data leads naturally into a discussion of data reduction and analysis as a means of imposing structure and meaning on what otherwise might constitute an ‘information overload’.
The chapter concludes with a review of decisionmaking under uncertainty and the ways in which decision-makers may combine objective ‘facts’ with their own subjective judgement to reach a decision using a Bayesian approach. Key takeaways include:
● Organisations that deliberately collect and analyse information in a formal and structured way outperform those that don’t.
● But using formal analytical procedures to solve marketing problems is difficult because many marketing problems are more or less unique and involve interaction with customers who can think for themselves and change their behaviour resulting in greater complexity than that associated with other problems.
● Managers avoid quantitative techniques because they do not understand them. However, such techniques
10 MARKETING STRATEGY AND MANAGEMENT
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it came to his knowledge, and then, on the 6th of March, 1897, went back over the record of his complaints and summed them up, as follows: "It will be convenient if I recapitulate briefly the occasions for such complaint, beginning with the cases relating to Article IV. of the Convention. …
"1. Netherlands Treaty.
On the 9th November 1895, an Extradition Treaty between the South African Republic and the Netherlands was signed at the Hague, and the ratifications were exchanged on the 19th June last, without the Treaty being submitted for the approval of Her Majesty. The case was therefore one of a clear infraction of the Convention, inasmuch as the Treaty had not been submitted to Her Majesty's Government on its completion, and had been concluded by the exchange of ratifications without obtaining the previous approval of the Queen. The Government of the South African Republic, on their attention being called to the infraction, did not deny that there had been a departure from the general practice, but urged that they had made no publication of the Treaty in anticipation of the approval of Her Majesty. The Treaty had, however, been published in the 'Netherlands Gazette' of the 3rd July, and I observed that when the Treaty was published in the 'Staats Courant' of the South African Republic after Her Majesty's approval had been given, the official notice merely stated that the Treaty was signed and ratified on certain dates, no reference being made to that approval.
"2.-The Accession of the South African Republic to the Geneva Convention.
After Dr. Jameson's raid, owing to a report made by the St. John's Ambulance Association, Her Majesty's Government determined to invite the South African Republic to accede to the Geneva Convention, and the necessary instructions were sent to Sir J. de Wet, who, however, omitted to carry them out. The South African Republic, on the 30th September, formally communicated to the Swiss Government, through their
Representative at the Hague, their act of accession to the Geneva Convention. Her Majesty's Government, in the circumstances, did not hesitate to convey the Queen's approval, but the action of the Government of the Republic none the less constituted a breach of the London Convention.
"3. Portuguese Treaty.
An Extradition Treaty between the South African Republic and Portugal was signed on the 3rd November 1893, but, contrary to the usual practice, has not yet been submitted for the Queen's approval, although two years have elapsed since Lord Ripon, in his Despatch of the 25th February 1895, requested your predecessor to call the attention of the President to the omission to communicate this Convention to Her Majesty's Government under the provisions of Article IV. of the London Convention. … I now pass to the consideration of some of the recent legislation of the Volksraad in its relation to Article XIV. It will be found that it involves in more than one case actual or possible breaches of the Convention. Article XIV. runs as follows: 'All persons, other than natives, conforming themselves to the laws of the South African Republic
(a) will have full liberty, with their families, to enter, travel, or reside in any part of the South African Republic;
(b) they will be entitled to hire or possess houses, manufactories, warehouses, shops, and premises;
(c) they may carry on their commerce either in person or by any agents whom they may think fit to employ;
(d) they will not be subject, in respect of their persons or property, or in respect of their commerce or industry, to any taxes, whether general or local, other than those which are or may be imposed upon citizens of the said Republic.'
"4. The Aliens Immigration Law.
This law imposes upon aliens conditions of a new and burthensome character in excess of the simple requirement that
they must conform themselves to the laws of the Republic. … 2. The Aliens Expulsion Law. This law empowers the President, with the advice and consent of the Executive Council, after consulting the State Attorney, to expel, without an appeal to the Court, any foreigner who, by word or writing, excites to disobedience or transgression of the law, or takes any steps dangerous to public peace and order. … Her Majesty's Government … do not admit that the Government of the Republic have a right to expel foreigners who are not shown to have failed to conform to the laws of the Republic, and they reserve the right to object to proceedings under the Act which may amount to a breach of the Convention.
3. The Press Law. This law empowers the State President, on the advice and with the consent of the Executive, to prohibit entirely or for a time the circulation of printed or published matter the contents of which are, in his judgment, contrary to good morals or a danger to the peace and order in the Republic. The suppression of the 'Critic' newspaper, the property of a British subject, under this law, is a matter which may raise a serious question as to whether the action of the Government of the Republic has been consistent with the Convention, but as Her Majesty's Government have not yet received the explanation of the Government of the Republic in that case, it is only necessary for me to make a passing allusion to it in this Despatch.
"In several of the cases above cited, the strict letter of the Convention could apparently have been observed without any difficulty, while in others the objects which the Government of the South African Republic had in view could have been attained without any infringement of the Convention by a previous understanding with Her Majesty's Government. Her Majesty's Government therefore cannot conceal from themselves that the Government of the South African Republic have in these cases failed to give effect in practice to the intention, so frequently expressed in public and official
{473}
utterances, of upholding the Convention on the part of the Republic, and of maintaining that good understanding with Her Majesty's Government which is so necessary in the interests of South Africa."
Of the laws complained of by Mr. Chamberlain, that relating to immigrant aliens had raised the most protest, because of its requirement that all such aliens who were permitted to enter and remain in the country must carry "travelling and residential passes," to be shown on demand. The Transvaal Government had met Mr. Chamberlain's first remonstrance on this subject, in January, by saying: "It is an evident fact that, especially during the last time, the immigration of aliens of the lowest class and without any means of subsistence has been increasing in a disquieting manner. These persons are dangerous to the peace of the inhabitants and of the State itself, and, in the opinion of this Government, no country whatever can be obliged to admit such undesirable persons. The regulation of unrestricted entry, as it at present takes place, is thus, from the point of view of police requirement, not only necessary but also entirely justified and constitutes no infringement of Article 14 of the Convention. This Government does not desire as yet to express any opinion on the suggestion that under the circumstances mentioned it should have approached Her Britannic Majesty's Government with a view to arriving at an understanding. In case, however, the Government of Her Britannic Majesty has another practical measure to propose whereby its above-mentioned subjects, whose presence here is not desired for the reasons stated, can be prevented from seeking an outlet on the soil of the South African Republic, and that measure can be found to be applicable to the subjects of other Powers as well (since the law makes no distinction in that respect) it will be ready, with gratitude, to give its full consideration to such measure."
Great Britain, Papers by Command: 1897, C. 8423.
SOUTH AFRICA: Cape Colony and Natal: A. D. 1897. Conference of colonial premiers with the British Colonial] Secretary.
See (in this volume)
ENGLAND: A. D. 1897 (JUNE-JULY).
SOUTH AFRICA: British South Africa Company: A. D. 1897 (January). Compulsory labor in Rhodesia.
In January, 1897, the Deputy Commissioner of the British government in Rhodesia made a report to the High Commissioner on several subjects pertaining to the native administration of the British South Africa Company which he had been instructed to investigate. One question to be answered was "whether there exists a law or practice whereby compulsory labor is exacted from natives, either by the government of the British South Africa Company, or by private persons with consent of the government, or by both?" From his lengthy report on this subject the High Commissioner deduced the following summary of conclusions, which he communicated to the colonial secretary:
"(1.) That compulsory labour did undoubtedly exist in Matabeleland, if not in Mashonaland.
(2.) That labour was procured by the various Native Commissioners for the various requirements of the Government, mining companies, and private persons.
(3.) That the Native Commissioners, in the first instance, endeavoured to obtain labour through the indunas, but, failing in this, they procured it by force."
Great Britain, Papers by Command: 1897, C. 8547.
SOUTH AFRICA: The Transvaal: A. D. 1897 (January-March).
Conflict of the Judiciary with the Executive and the Volksraad. The case of R. E. Brown.
In January, 1897, a decision was rendered by the High Court of the Republic which brought it into conflict with President Kruger and the Volksraad. This decision was given in connection with a suit brought against the government of the South African Republic by an American engineer, Mr. R. E. Brown, and the claim of Mr. Brown had arisen out of circumstances which were subsequently related by a speaker in the United States Senate, as follows: Mr. R. E. Brown, a young American mining engineer, living and operating in the Cœur d'Alene district, in the State of Idaho, about eight years ago, at the invitation of English capitalists, left this country to go to the South African Republic for the purpose of assisting in the development of the gold mines of that country. It was about that time that Hammond, Clements, and other American engineers went there, and it is not too much to say that the genius and the energy of those young Americans more than anything else made that country a great gold producer and its mines the most valuable of any in the world. At that time most of the mines were held by English companies or Germans. The laws were very simple, but in some respects appear to have been drawn in the interest of the wealthy syndicates. Upon the discovery of new mines the President of the Republic by proclamation opened them to mining locations, fixing a day and hour at which they would be opened to such location. Thereafter persons desiring to stake out mines had to go to the office of the responsible clerk of the district in which the mines were located to make application for licenses to locate the mines, and thereafter they were authorized, either in person or by deputy, to go on the ground and make mining locations. {474}
Under this system most of the valuable mines of the country had been absorbed, as I said, by English and German
syndicates. The mode in which they operated to absorb the mines was to place their men upon the newly opened ground and at the earliest possible moment apply for licenses to locate the mines, and then by means of couriers with swift horses, or by signals from mountain to mountain where that was possible, to convey information to their men and cause the mines to be located before their rivals could get on the ground. Mr. Brown had not been in the country very long before he learned of this antiquated system, and he determined on the next opening of mines to apply to their location some of the snap and go of American methods.
"In June, 1895, President Kruger by proclamation opened the mines on the Witfontein farm, district of Potchefstroom, the responsible clerk for which resided at Doornkop, in that district. Mr. Brown determined that he would acquire some of these mines, at least, and as large a number of them as possible. Witfontein was only 30 miles from Doornkop. The mines were known to be very valuable, because they had been prospected on each side and it was found that valuable gold-bearing reefs ran through them from end to end. Accordingly he purchased heliographic instruments and employed expert heliographic operators, and without the knowledge of his rivals established heliographic communication between Doornkop and Witfontein. Then he placed his men upon the ground, and on the 19th day of July, 1895, the earliest period at which he was permitted to do so, he appeared at the office of the responsible clerk and sought licenses to locate 1,200 mines upon this ground. However, on the day before the opening of the mines his rivals had found out about the heliographic communication, but they were beaten in the race. In that extremity they communicated with President Kruger by wire and induced him on the night of the 18th to issue a second proclamation, withdrawing the mines of Witfontein from the privilege of mining locations, and when Mr. Brown appeared at the office of the responsible clerk and tendered his money he was met with the information of this action on the part of the
President of the South African Republic, and his application was refused. But nothing daunted he caused his agents on the ground to locate the mines the same as if the licenses had been granted to him, and then he brought suit before the high court of justice of the South African Republic against the Republic, alleging the facts substantially as I have stated them and praying that the authorities be compelled to issue to him licenses for the mines located, or in lieu thereof that compensation be made to him in the sum of £372,400, amounting to about $1,850,000. While this suit was pending it was sought to re-enforce the action of the President in withdrawing these lands, and the Volksraad [passed a resolution approving the withdrawal and declaring that no person should be entitled to compensation on account of it]."
United States Congressional Record, January 21, 1901, page 1370.
On Mr. Brown's suit, the High Court of the Republic decided that the claimant's right to the land was good, and could not be set aside by ex post facto measures of the Executive or the Legislature. The President and the Volksraad refused to submit to this decision, and passed a law to overrule it, on the ground that, under the Grondwet (constitution), the Volksraad is the highest power in the state. In a subsequent public statement of the matter, Justice Kotze, the Chief Justice, explained the issue that was thus raised between his court and the President, and also related the circumstances of a compromise by which it was settled temporarily, as follows:
"This so-called Law Number 1 of 1897 seeks to deprive the judges of the testing right, authorizes the President to put a certain question to the members of the bench that they would not arrogate to themselves the so-called testing power, and empowers him to instantly dismiss the judge or judges from whom he receives no answer, or, in his opinion, an unsatisfactory answer. The judges for the future are also
subjected to a humiliating form of oath. This measure, it seems almost superfluous to observe, is no law. It alters the constitution of the country without any previous reference to the people, and for the reasons given in the Brown case it is devoid of all legal validity. The five judges, on March 1, 1897, unanimously issued a declaration, stating that by this so-called Law Number 1 of 1897 a vital violation of the independence of the bench had taken place, and that the judges were exposed in future to the suspicion of bribery. In fact, the nature and tendency of this measure are so immoral that one of the judges openly said that no honorable man can occupy a seat on the bench while Law Number 1 of 1897 remains on the statute book.
"The question above referred to was duly put by the President to the judges, who had unanimously signed a letter to the effect that they did not feel themselves at liberty to give any answer, when the chief justice of the Cape Colony arrived in Pretoria, and through his mediation a written understanding was proposed by the judges on March 19, and accepted without any qualification by the President on March 22, 1897. By the terms of this compact the judges undertook not to test laws and resolutions of the Volksraad on the distinct understanding that the President would as soon as possible submit a draft Grondwet to the Volksraad providing how alone the Grondwet can be altered by special legislation in a manner analogous to the provisions contained in the constitution of the Orange Free State on the subject, and incorporating the guaranties for the independence of the judiciary. By these means the judges intended to protect both the constitution and the bench against sudden surprises and attacks, such as, for instance, the oft-quoted measure known as Law Number 1, of 1897. They did this to avert a crisis, and, in order to help the Government and Volksraad out of a difficulty of their own creation, placed themselves under a temporary obligation upon the faith of the President as speedily as possible complying with his portion of the understanding."
United States, 56th Congress, 1st Session, House Document Number 618.
The promised amendment of the Grondwet was not made, and the issue concerning it was brought to a crisis in the next year.
See below: A. D. 1898 (JANUARY-FEBRUARY).
SOUTH AFRICA: A. D. 1897 (February): Appointment of Sir Alfred Milner.
In February, Sir Alfred Milner was appointed High Commissioner for South Africa and Governor of Cape Colony, to succeed Sir Hercules Robinson, retired, and raised to the peerage as Lord Rosmead.
{475}
SOUTH AFRICA: The Transvaal: A. D. 1897 (February). The franchise.
The government of the Transvaal extended the full franchise to 862 Uitlanders who supported it at the time of the Jameson raid.
SOUTH AFRICA: The Transvaal: A. D. 1897 (February.) Indemnity claimed by the South African Republic for the Jameson Raid.
On the 16th of February, 1877, the State Secretary of the South African Republic, Dr. W. J. Leyds, presented to the British High Commissioner the following "specification of the compensation to which the Government of the South African Republic lays claim for and in connexion with the incursion into the Territory of the South African Republic by Dr. Jameson and the Troops of the Chartered Company at the end of
December 1895 and the beginning of January 1896.
1. Expenditure for military and commando services In connexion with the incursion, the sum of. £136,733 s.4 d.3
2. Compensation to the Netherlands South African Railway Company for making use, in accordance with the concession granted to that Company, of the railway worked by it during the commando on account of the incursion of Dr. Jameson. £9,500 s.0 d.0
3. Disbursements to surviving relatives of slain and wounded. £234 s.19 d.6
4. For annuities, pensions, and disbursements to widows and children of slain burghers and to relatives of unmarried slain burghers, as also to wounded burghers, a total sum of. £28,243 s.0 d.0
5. Expenses of the telegraph department, for more overtime, more telegrams on service in South African communication, more cablegrams, &c. £4,692 s.11 d.9
6. Hospital expenses for the care of the wounded and sick men, &c. of Dr. Jameson. £225 s.0 d.0
7. For support of members of the families of commandeered burghers during the commando. £177 s.8 d.8
8. Compensation to be paid to the and the commandeered burghers for their services troubles and cares brought upon them. £62,120 s.0 d.0
9. Account of expenses of the Orange
Free State.
Total
£36,011 s.19 d.1
£677,936 s.3 d.3
"Moral or intellectual compensation to which the Government of the South African Republic lays claim for and in connexion with the incursion into the Territory of the South African Republic by Dr. Jameson and the Troops of the Chartered Company at the end of December 1895 and the beginning of January 1896. One million pounds sterling (£1,000,000)."
To this claim the British colonial secretary, Mr. Chamberlain, replied on the 10th of April, saying, with reference to the specification under the second head, "for moral or intellectual damage," that "Her Majesty's Government … regret that they do not feel justified in presenting it to the British South Africa Company"; and adding: "Her Majesty's Government fear that they may be compelled to take similar exception to certain of the items composing the first head, especially in view of the very short period which elapsed between the crossing of the frontier by Dr. Jameson's force and its surrender; but as it is apparent from the nature of the figures that the Government of the South African Republic have proceeded on very precise data in arriving at the various sums to which they lay claim, Her Majesty's Government, before offering any observations on this part of the claim, would ask his Honour to be so good as to furnish them with full particulars of the way in which the different items comprised in the first head have been arrived at."
Great Britain, Papers by Command: C. 8404, 1897; and C. 8721, 1898.
SOUTH AFRICA: The Transvaal: A. D. 1897 (February-July).
British parliamentary investigation of the Jameson Raid.
A Committee of the British House of Commons, appointed "to
inquire into the origin and circumstances of the incursion into the South African Republic by an armed force, and into the administration of the British South Africa Company," began its sittings on the 16th of February, 1897. Among the members of the Committee were the Chancellor of the Exchequer, the Attorney-General, Mr. Chamberlain, the Secretary of State for the Colonies, Sir William Harcourt, Sir John Lubbock, Sir H. Campbell-Bannerman, Mr. Labouchere, Mr. John Ellis, Mr. Buxton, Mr. Blake, and others. Mr. Rhodes, who was first examined by the Committee, read a statement of the circumstances leading up to the raid, in which he said that, as one largely interested in the Transvaal, he felt that the unfriendly attitude of the Boer Government was the great obstacle to common action among the various states in South Africa, and that, therefore, he had assisted the movement in Johannesburg with his purse and influence. "Further," he said, "acting within my rights, in the autumn of 1895 I placed a body of troops under Dr. Jameson, prepared to act in the Transvaal in certain eventualities." Subsequently Mr. Rhodes declared: "With reference to the Jameson raid, I may state that Dr. Jameson went in without my authority." He concluded his statement by declaring that in what he did he was greatly influenced by his belief that the policy of the Boer Government was to "introduce the influence of another foreign Power into the already complicated system of South Africa." Mr. Rhodes was kept under examination before the Committee for four days, and then "almost the next thing heard of him was that he had started for South Africa on his way back to Rhodesia." Another witness examined was Sir Graham Bower, Secretary to the High Commissioner at the Cape. "His evidence was certainly most startling, and at the same time of great importance. He stated that late in October, 1895, Mr. Rhodes came into his office and said: 'I want you to give me your word of honour that you will not say a word to anyone about what I am going to tell you.' Sir Graham Bower who, as he said, had a great many Cape secrets in his possession pledged his word, and soon found he was in possession of a secret
which it was his official duty to disclose to the High Commissioner and his private duty not to disclose. Mr. Rhodes then said that he was negotiating about the Protectorate, that there was going to be a rising in Johannesburg, and that he wished to have a police force on the border. He added in substance: 'If trouble comes I am not going to sit still. You fellows are infernally slow.' It further transpired that on the fateful Sunday (December 28) Mr. Rhodes had told him that Jameson had gone in, but that he hoped that the message he had sent would stop him." {476}
When Dr. Jameson was examined he fully acknowledged his conspiracy with the Johannesburg revolutionists, and stated that he had given information of it to Mr. Rhodes, adding; "He agreed, and we arranged that when the rising took place he should go to Johannesburg or Pretoria with the High Commissioner and Mr. Hofmeyr to mediate between the Transvaal Government and the Uitlanders. With these matters settled, I left Cape Town and joined my camp at Pitsani. I required no orders or authority from Mr. Rhodes, and desired neither to receive nor to send any messages from or to Cape Town."
In the course of the inquiry, Mr. Chamberlain, the Colonial Secretary, desired to give testimony, and related that Dr. Harris, the Secretary in South Africa to the British South Africa Company, said to him, "I could tell you something in confidence," or "I could give you some confidential information"; but that he (Chamberlain) stopped him at once, saying, "I do not want to hear any confidential information. I am here in an official capacity, and I can only hear information of which I can make official use"; and adding: "I have Sir Hercules Robinson in South Africa. I have entire confidence in him, and I am quite convinced he will keep me informed of everything I ought to know." In concluding his testimony, Mr. Chamberlain said: "I desire to say, in the most explicit manner, that I did not then have, and that I never had, any knowledge or until, I think it was, the day before
the raid took place the slightest suspicion of anything in the nature of a hostile or armed invasion of the Transvaal." The Committee having called upon Mr. Rhodes' solicitor, a Mr. Hawksley, to produce telegrams which had passed between Mr. Rhodes and himself, refused to do so.
"The proceedings which ensued were not to the credit of the Committee, for instead of reporting the matter to the House at once in a special report, they decided to refer to it in the interim report on the raid. Mr. Labouchere and Mr. Blake alone opposed this course, which was either a confession of unwillingness to reach the bottom of the business, or the suggestion that somebody was to be shielded. … Having devoted two days to hearing counsel on behalf of Mr. Rhodes, Mr. Beit and Dr. Harris, the Committee adjourned to consider its report. The general feeling was that the proceedings had been conducted with singular laxity or want of skill. Those interested in keeping secret the true history of the raid were entirely successful, and it was generally by the merest chance that any fact of importance was elicited from the witnesses. The representatives of the Opposition, Sir William Harcourt, Sir H. Campbell-Bannerman and Mr. Buxton, were, after Mr. Rhodes had been unaccountably permitted to quit England, willing to allow the breakdown of the proceedings; and what was even more surprising in so strict a parliamentarian as Sir William Harcourt, a witness was allowed to treat the Committee with defiance, and to pass unchecked. To a very great extent the inquiry had been obviously factitious, but in whose interest concealment was considered necessary remained undivulged. It was surmised that reasons of State had been found which outweighed party considerations, and that the leaders of the Opposition had been privately convinced that the alleged grounds were sufficient for the course adopted."
The report of the majority of the Committee, signed by all of its members except Mr. Labouchere and Mr. Blake (the former of whom submitted a minority report), was made public on the 13th
of July. The results of its inquiry were summed up under the following heads:
I. "Great discontent had, for some time previous to the incursion, existed in Johannesburg, arising from the grievances of the Uitlanders.
II. Mr. Rhodes occupied a great position in South Africa; he was Prime Minister of the Cape Colony, and, beyond all other persons, should have been careful to abstain from such a course of action as that which he adopted. As managing director of the British South Africa Company, as director of the De Beers Consolidated Mines and the Gold Fields of South Africa, Mr. Rhodes controlled a great combination of interests; he used his position and those interests to promote and assist his policy. Whatever justification there might have been for action on the part of the people of Johannesburg, there was none for the conduct of a person in Mr. Rhodes' position in subsidising, organising, and stimulating an armed insurrection against the Government of the South African Republic, and employing the forces and resources of the Chartered Company to support such a revolution. He seriously embarrassed both the Imperial and Colonial Governments, and his proceedings resulted in the invasion of the territory of a State which was in friendly relations with her Majesty, in breach of the obligation to respect the right to self-government of the South African Republic under the conventions between her Majesty and that State. Although Dr. Jameson 'went in' without Mr. Rhodes' authority, it was always part of the plan that these forces should be used in the Transvaal in support of an insurrection. Nothing could justify such a use of such a force, and Mr. Rhodes' heavy responsibility remains, although Dr. Jameson at the last moment invaded the Transvaal without his direct sanction.
III. Such a policy once embarked upon inevitably involved Mr. Rhodes in grave breaches of duty to those to whom he owed
allegiance. He deceived the High Commissioner representing the Imperial Government, he concealed his views from his colleagues in the Colonial Ministry and from the board of the British South Africa Company, and led his subordinates to believe that his plans were approved by his superiors.
IV. Your committee have heard the evidence of all the directors of the British South Africa Company, with the exception of Lord Grey. Of those who were examined, Mr. Beit and Mr. Maguire alone had cognisance of Mr. Rhodes' plans. Mr. Beit played a prominent part in the negotiations with the Reform Union; he contributed large sums of money to the revolutionary movement, and must share full responsibility for the consequences.
V. There is not the slightest evidence that the late High Commissioner in South Africa, Lord Rosmead, was made acquainted with Mr. Rhodes' plans. The evidence, on the contrary, shows that there was a conspiracy to keep all information on the subject from him. The committee must, however, express a strong opinion upon the conduct of Sir Graham Bower, who was guilty of a grave dereliction of duty in not communicating to the High Commissioner the information which had come to his knowledge. Mr. Newton failed in his duty in a like manner.
VI. Neither the Secretary of State for the Colonies nor any of the officials of the Colonial Office received any information which made them, or should have made them or any of them, aware of the plot during its development. {477}
VII. Finally, your committee desire to put on record an absolute and unqualified condemnation of the raid and of the plans which made it possible."
"The result caused for the time being grave injury to British influence in South Africa. Public confidence was shaken, race feeling embittered, and serious difficulties were created with neighbouring States. The course of action subsequently taken by the Government increased the suspicions which were aroused by such an emasculated report. Two days after its publication (July 15), Mr. Balfour was asked to set apart a day for the formal discussion of so important a matter. To this request Mr. Balfour, with the tacit concurrence of the front Opposition bench, replied that he saw no useful purpose to be served by such a debate."
Those who were known as the "Forward Radicals," or "Forwards," in the House, were not to be silenced in this manner, and debate was forced upon a motion expressing regret at "the inconclusive action and report of the select committee on British South Africa," and summoning Mr. Hawksley to the bar of the House, to produce "then and there," the telegrams which he had refused to the committee. In the course of the discussion which followed, Mr.Chamberlain expressed his conviction that, "while the fault of Mr. Rhodes was about as great a fault as a politician or statesman could commit, there existed nothing which affected his personal character as a man of honour." When Sir Elliott Lees, a supporter of the government, rose to protest against such a doctrine, he was met by cries which silenced his speech. The House then divided, and the resolution was defeated by 304 to 77. "It was an open secret that throughout the debate one member, unconnected with either front bench, sat with the famous telegrams in his pocket, and with them certain correspondence relating thereto which he had been instructed to read in the event of Mr. Rhodes' character being aspersed."
Annual Register, 1897.
"The position … stands thus. The Colonial Office conceals its own documents. From none of its officials have we had any
detailed or frank statement as to their relations to South African affairs during the critical period. The High Commissioner himself has not been examined. Mr. Rhodes has been allowed to go without any serious inquiry into this branch of the case. The most important cables are refused by Mr. Rhodes's order, and the Committee decline to exercise their power to compel the production of them. The story, in fact, so far as it concerns this question of the truth or falsity of the allegation that Mr. Chamberlain was 'in it,' is being smothered up, with an audacious disregard of the principles which guide all ordinary tribunals. The last steps in this proceeding have been taken with the direct assent of the leader of the Opposition. Everybody, therefore, is inquiring what reason can have induced Sir William Harcourt to execute this startling change of front. There is only one reason that can, with any probability, be assigned-that is, that some member of the Government has made a 'Front Bench communication' to the leader of the Opposition, indicating to him explicitly that there are 'reasons of State' for stopping the disclosures. There can be little doubt that this is what has happened, and conjecture, not only in this country but elsewhere, will naturally be keen to know what the nature of this momentous disclosure was.
"If Mr. Chamberlain was as absolutely free from knowledge of the Jameson plan as he has professed to be, it is hard to see how full disclosure could do any damage to the Empire, or could do anything but good to the Colonial Secretary himself. Mr. Chamberlain, of course, professes in words his private desire that everything should come out. He has not, however, assisted in the attainment of that result. The consequence is that a national and international question of very grave importance has arisen. It is said in circles usually well informed, that when the Raid occurred, it became necessary to give assurances to foreign Governments, and in particular to Germany, that the Queen's Government was in no way compromised. These assurances, it is said, were given. It is
even said that they were given expressly in the name of the Queen. Something of this kind may well have happened; but it is hard to see how, if it did happen, and if the Colonial Office was as innocent as it claims to be, the disclosure of the facts can do anything but confirm the Queen's word. That documents exist which are supposed to be compromising, and which the very authors of them allege to be compromising, is a fact past hiding. It casts, unless it is cleared up, a damning doubt. Therefore it would appear to be the duty of all honest men, and, above all, of the Parliament of Great Britain, to see that an immediate end is put to a policy which may be aptly described as 'thimble-rigging,' and that the truth, whether it suits Mr. Rhodes or Mr. Chamberlain, or neither of them, must be told at fist."
Contemporary Review, July, 1897.
SOUTH AFRICA: Orange Free State and Transvaal: A. D. 1897 (April). Treaty of alliance.
In April, the two republics entered into a treaty for mutual support and defense against attacks on the independence of either, each opening its political franchises to the citizens of the other on the taking of an oath of allegiance.
SOUTH AFRICA: The Transvaal: A. D. 1897 (April). Military expenditure by British and Boer Governments.
The budget of the British Chancellor of the Exchequer, submitted to the House of Commons in April, contained an item of '£200,000 for increased military expenditure in South Africa. This was promptly attacked by the opposition, who accused the government of pursuing a war policy in its dealings with the Transvaal. Sir William Harcourt declared that Mr. Chamberlain had, "in every utterance of his during the last few months, been endeavouring to exasperate sentiment
