ch8 - implementing strategies (10th)

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Copyright 2005 Prentice Hall Ch 8-1

Chapter 8Implementing Strategies: Marketing,

Finance/Accounting, R&D, & MIS Issues

Strategic Management:

Concepts & Cases10th Edition

Fred David

PowerPoint Slides by

Anthony F. Chelte

Western New England College




1. Market segmentation

2. Product positioning

Marketing Issues

Centrally important to Implementation



Ch 8-3

Marketing Mix ± Component Factors

Service level

Warranty

Transportation

carriersProduct line

Inventory

levels/locationsPackaging

PublicitySales territoriesBrand name

Payment termsSales promotionOutlet locationStyle

Discounts &

allowancesPersonal selling

Distribution

coverageFeatures

Level AdvertisingDistributionchannels

Quality

PricePromotionPlaceProduct




Marketing Issues

Market SegmentBasis Psychographic

Behavioral

Geographic

Demographic




Marketing Issues

ProductPositioning

Customer Wants

Customer Needs




Product Positioning Steps

ProductPositioning

Steps

2. Diagram Map

1. Select Key Criteria

3. Plot competitors¶products

4. Look for niches

5. Develop MarketingPlan




Product Positioning Map

Low

Convenience

High

Customer

Loyalty

Low

Customer

Loyalty

HighConvenience

Firm 1

Firm 2

Firm 3

R ental Car Market

Low

Customer

Loyalty

HighConvenience

Firm 1

Firm 2

Firm 3

R ental Car Market




EPS-EBIT Analysis (in $millions) ± Heinz

Company

Stock Financing Financing Financing

High Low High Low High Low

EBIT ($982.4 in 2001) $2000 $1000 $2000 $1000 $2000 $1000

Interest (5%) 0 0 25 25 10 10

EBT 2000 1000 1975 975 1990 990

Taxes 26% 520 260 514 254 517 257

EAT 1480 740 1461 721 1473 733

# Shares outstanding 362.5 362.5 350 350 357.5 357.5

EPS 4.08 2.04 4.17 2.06 4.12 2.05




Conclusion:

Heinz should use debt to raise the $500 million

Finance/Accounting Issues

EPS-EBIT Analysis Heinz




Allow an organization to examine the expectedresults of various actions and approaches


Projected Financial Statements




Projected Income Statement for Litten Company (in millions)

Prior Year 2004

Projected Year

2005 Remarks

Projected Income Statement

Sales 100 150.00 50% increase

Cost of Goods Sold 70 105.00 70% of sales

Gross Margin 30 45.00

Selling Expense 10 15.00 10% of sales

Administrative Expense 5 7.50 5% of sales

EBIT 15 22.50

Interest 3 3.00

EBT 12 19.50

Taxes 6 9.75 50% rateNet Income 6 9.75

Dividends 2 5.00

Retained Earnings 4 4.75




-- Details how funds will be obtained and spent for a specified period of time.


Financial Budget




Cash budgets

Operating budgets Sales budgets

Profit budgets

Factory Budgets

Expense Budgets


Types of Budgets




Divisional budgets Variable budgets

Flexible budgets

Fixed budgets


Types of Budgets




1. What a firm owns

2. What a firm earns

3. What a firm will bring in the market


Evaluating Worth of a Business:

3 Basic Approaches




1. 1st firm to market new technological products

2. Innovative imitator of successful products

3. Low-cost producer of similar but less

expensive products

Research & Development

Issues

3 Major R&D approaches to implementing

strategies




Information collection, retrieval, & storage

Keeping managers informed

Coordination of activities among divisions

Allow firm to reduce costs

MIS Issues

Functions of MIS

ch8 - implementing strategies (10th)

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