chapter 8 implementing strategies: marketing, finance ... · pdf filefinance/accounting issues...

Copyright © 2011 Pearson Education, Inc.

Publishing as Prentice Hall

Chapter 8

Implementing Strategies: Marketing,

Finance/Accounting, R&D, and MIS Issues

Strategic Management:

Concepts & Cases

13th Edition

Fred David



“The greatest strategy is doomed

if it’s implemented badly.”

– Bernard Reimann

Implementing Strategies



Less than 10% of strategies formulated

are successfully implemented!

The Nature of Strategy

Implementation



Exclusive dealerships or multiple channels of

distribution

Heavy, light, or no TV advertising

To limit or not the share of business with a single

customer

Price leader or price follower

Offer complete or limited warranty

Reward salespeople with commission or salary

Advertise online or not

Marketing Issues

Marketing decisions requiring policies



Current Marketing Issues

Advertising media

Purpose-based marketing



Market segmentation

Product positioning

Marketing Issues



Subdividing of a market into distinct subsets of customers according to needs and buying habits

Marketing Issues

Market Segmentation



Market Segmentation

Market Segment

Basis Psychographic

Behavioral

Geographic

Demographic



Market-development, product-development, market-penetration, and diversification strategies require market segmentation

Market segmentation allows operating with limited resources; enables small firms to compete successfully

Market segmentation decisions affect marketing mix variables

Market Segmentation



Product

Place

Promotion

Price

Marketing Mix Variables



Marketing Issues

Schematic representations that reflect

how products/services compare to

competitors’ on dimensions most

important to success in the industry

Product Positioning



Product Positioning Steps

1. Select key criteria

2. Diagram map

3. Plot competitors’ products

4. Look for niches

5. Develop marketing plan



Product-Positioning Map for Banks

Personal

Impersonal

Aggressive Conservative

Bank A

Bank B

Bank C

Bank D

Bank E



Product-Positioning Map for Personal

Computers High Capability

Low Capability

Good Customer

Service

Bad Customer

Service

Firm 1

Firm 2

Firm 3

Firm 4



Product-Positioning Map for

Menswear Retail Stores Very latest, fashionable

menswear

Conservative, everyday

menswear

Low Price High Price

Average

department store

Average specialty

chain

Average mass

merchandiser or

discounter



Product-Positioning Map for the

Rental Car Market High Convenience

Low Convenience

High Customer

Loyalty

Low Customer

Loyalty

Firm 1

Firm 2

Firm 3



Look for a vacant niche

Don’t serve two segments with the same strategy

Don’t position yourself in the middle of the map

Product Positioning



Finance/Accounting Issues

Acquiring needed capital

Developing projected financial statements

Preparing financial budgets

Evaluating the worth of a business



Raise capital – short-term debt, long-term debt, preferred, or common stock

Lease or buy fixed assets

Determine appropriate dividend payout ratio

LIFO, FIFO, or market-value accounting

Timeframe of accounts receivable

Discounts on accounts

Amount of cash to be kept on hand




EPS/EBIT analysis Earnings per share/earnings before interest

and taxes


Debt vs. Equity Decisions



Allows an organization to examine the expected results of various actions and approaches


Projected Financial Statement Analysis



1. Prepare income statement before balance sheet (forecast sales)

2. Use percentage of sales method to project CGS & expenses

3. Calculate projected net income


Steps in Preparing Projected Financial

Statements



4. Subtract dividends to be paid from net income and add remaining to retained earnings

5. Project balance sheet items beginning with retained earnings

6. List comments (remarks) on projected statements


Steps in Preparing Projected Financial

Statements (cont’d)



Projected Income Statement



Projected Balance Sheet



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


Financial Budget



Types of Budgets

Cash budgets

Operating budgets

Sales budgets

Profit budgets

Factory budgets

Capital budgets

Expense budgets

Divisional budgets

Variable budgets

Flexible budgets

Fixed budgets



Central to strategy implementation – integrative, intensive, and diversification strategies often implemented through acquisitions of other firms


Evaluating Worth of a Business



1. What a firm owns

2. What a firm earns

3. What a firm will bring in the market


Three Basic Approaches




Net worth or stockholder’s equity

Net profit – conservative value

would be five times the firm’s

current annual profits

Price-earnings ratio method

Outstanding shares method



Research & Development Issues

New products and improvement of

existing products that allow for effective

strategy implementation



Level of support constrained by resource availability

Technological improvements shorten product life cycles


Constraints



1. First firm to market new technological

products

2. Innovative imitator of successful products

3. Low-cost producer of similar but less

expensive products


Three Major R&D Approaches to

Implementing Strategies



Management Information

Systems (MIS) Issues

Having an effective management

information system (MIS) may be the

most important factor in differentiating

successful from unsuccessful firms.



Information collection, retrieval, and storage

Keeping managers informed

Coordination of activities among divisions

Allows firm to reduce costs

MIS Issues

Functions of MIS

Reference

David, Fred. R. (2009). Strategic

Management Concepts (12th ed.). Upper

Saddle River, NJ: Prentice Hall.



chapter 8 implementing strategies: marketing, finance ... · pdf filefinance/accounting issues...

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