david ppt exp ch08
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implementing strategiesTRANSCRIPT
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Copyright 2007 Prentice HallCh 8-*Chapter 8Implementing Strategies: Marketing, Finance/Accounting, R&D, & MIS Issues
Strategic Management: Concepts & Cases11th EditionFred David
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Copyright 2007 Prentice HallCh 8-*Chapter OutlineThe Nature of Strategy ImplementationMarketing IssuesFinance/Accounting Issues
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Copyright 2007 Prentice HallCh 8-*Chapter Outline (contd)Research & Development (R&D) IssuesManagement Information Systems (MIS) Issues
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Copyright 2007 Prentice HallCh 8-* The greatest strategy is doomed if its implemented badly. --Bernard ReimannImplementing Strategies
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Copyright 2007 Prentice HallCh 8-* -- Strategy implementation means changeThe Nature of Strategy Implementation
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Copyright 2007 Prentice HallCh 8-* -- Less than 10% of strategies formulated are successfully implemented!The Nature of Strategy Implementation
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Copyright 2007 Prentice HallCh 8-*Failing to segment markets appropriatelyPaying too much for a new acquisitionFalling behind competition in R&DNot recognizing benefit of computers in managing informationThe Nature of Strategy Implementation
Low Success Rate Strategy Implementation
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Copyright 2007 Prentice HallCh 8-*Market goods & services wellRaise needed working capitalProduce technologically sound goodsSound information systemsThe Nature of Strategy ImplementationSuccessful Strategy Implementation
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Copyright 2007 Prentice HallCh 8-*Marketing Issues -- Marketing variables affect success/failure of strategy implementation
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Copyright 2007 Prentice HallCh 8-*Exclusive dealerships multiple channels of distributionHeavy, light, or no TV advertisingPrice leader or price followerAdvertise online or notOffer complete or limited warrantyMarketing IssuesMarketing decisions requiring policies
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Copyright 2007 Prentice HallCh 8-*Market segmentation
Product positioning
Marketing IssuesCentrally important to Implementation
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Copyright 2007 Prentice HallCh 8-*Subdividing of a market into distinct subsets of customers according to needs and buying habitsMarketing IssuesMarket Segmentation
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Copyright 2007 Prentice HallCh 8-*Key to matching supply & demandMarket development, product-development, market penetration & diversification strategiesAllows operating with limited resourcesEnables small firms to compete successfullyMarketing IssuesMarket Segmentation
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Copyright 2007 Prentice HallCh 8-*Directly affect marketing mix variables:ProductPlacePromotionPriceMarketing IssuesMarket Segmentation
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Copyright 2007 Prentice HallCh 8-*Marketing Mix Component Factors
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Copyright 2007 Prentice HallCh 8-*Marketing IssuesMarket Segment BasisPsychographicBehavioralGeographicDemographic
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Copyright 2007 Prentice HallCh 8-*RegionCounty sizeCity or SMSA sizeDensityClimateMarketing IssuesGeographic
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Copyright 2007 Prentice HallCh 8-*Marketing IssuesMarket Segment BasisPsychographicBehavioralGeographicDemographic
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Copyright 2007 Prentice HallCh 8-*AgeFamily SizeFamily Life CycleIncome/OccupationEducationReligionRace/NationalityMarketing IssuesDemographic
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Copyright 2007 Prentice HallCh 8-*Marketing IssuesMarket Segment BasisPsychographicBehavioralGeographicDemographic
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Copyright 2007 Prentice HallCh 8-*Social ClassLifestylePersonalityMarketing IssuesPsychographic
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Copyright 2007 Prentice HallCh 8-*Marketing IssuesMarket Segment BasisPsychographicBehavioralGeographicDemographic
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Copyright 2007 Prentice HallCh 8-*Use occasionBenefits soughtUser statusUsage rateLoyalty statusReadiness stageAttitude toward productMarketing IssuesBehavioral
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Copyright 2007 Prentice HallCh 8-*Marketing Issues -- Schematic representations that reflect how products/services compare to competitors on dimensions most important to success in the industryProduct Positioning
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Copyright 2007 Prentice HallCh 8-*Marketing IssuesProduct PositioningCustomer WantsCustomer Needs
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Copyright 2007 Prentice HallCh 8-*Product Positioning StepsProductPositioning Steps2. Diagram Map1. Select Key CriteriaPlot competitorsproducts4. Look for niches5. Develop Marketing Plan
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Copyright 2007 Prentice HallCh 8-*Product Positioning MapLowConvenienceHighCustomerLoyaltyLowCustomerLoyalty
HighConvenienceFirm 1Firm 2
Firm 3Rental Car MarketLowCustomerLoyalty
HighConvenienceFirm 1Firm 2
Firm 3Rental Car Market
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Copyright 2007 Prentice HallCh 8-*Look for vacant nicheAvoid sub optimizationDos serve 2 segments w/ same strategyDonts position in the middle of the mapMarketing IssuesProduct Positioning as Strategy Implementation Tool
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Copyright 2007 Prentice HallCh 8-*Finance/Accounting Issues -- Central to strategy implementation
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Copyright 2007 Prentice HallCh 8-*Acquiring needed capitalDeveloping projected financial statementsPreparing financial budgetsEvaluating worth of a businessFinance/Accounting IssuesEssential for implementation
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Copyright 2007 Prentice HallCh 8-*Raise capital short-term, long-term, preferred, or common stockLease or buy fixed assetsDetermine appropriate dividend payout ratio
Finance/Accounting IssuesDecisions based on Finance/Accounting
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Copyright 2007 Prentice HallCh 8-*LIFO, FIFO, or market-value accounting approachExtend time of AREstablish % discount on accounts for termsDetermine the amount of cash kept on handFinance/Accounting IssuesDecisions based on Finance/Accounting
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Copyright 2007 Prentice HallCh 8-*Debt
EquityFinance/Accounting IssuesCapital acquisition to implement strategies
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Copyright 2007 Prentice HallCh 8-*EPS/EBIT analysisEarnings per share/Earnings before interest and taxesFinance/Accounting IssuesDebt vs. Equity Decisions
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Copyright 2007 Prentice HallCh 8-*Allow an organization to examine the expected results of various actions and approachesFinance/Accounting IssuesProjected Financial Statements
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Copyright 2007 Prentice HallCh 8-*Prepare income statement before balance sheet (forecast sales)
Use percentage of sales method to project CoGS & expenses
Calculate projected net incomeFinance/Accounting IssuesSteps in Preparing Projected Financial Statements
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Copyright 2007 Prentice HallCh 8-*Subtract dividends to be paid from Net Income and add remaining to Retained Earnings
Project balance sheet times beginning with retained earnings
List comments (remarks) on projected statementsFinance/Accounting IssuesSteps in Preparing Projected Financial Statements (contd)
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Copyright 2007 Prentice HallCh 8-*Projected Income Statement for Litten Company (in millions)
Prior Year 2005Projected Year 2006RemarksProjected Income StatementSales100150.0050% increase Cost of Goods Sold70105.0070% of salesGross Margin3045.00 Selling Expense1015.0010% of sales Administrative Expense57.505% of salesEBIT1522.50 Interest33.00EBT1219.50 Taxes69.7550% rateNet Income69.75 Dividends25.00Retained Earnings44.75
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Copyright 2007 Prentice HallCh 8-*-- Details how funds will be obtained and spent for a specified period of time.Finance/Accounting IssuesFinancial Budget
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Copyright 2007 Prentice HallCh 8-*Cash budgetsOperating budgetsSales budgetsProfit budgetsFactory BudgetsExpense BudgetsFinance/Accounting IssuesTypes of Budgets
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Copyright 2007 Prentice HallCh 8-*Divisional budgetsVariable budgetsFlexible budgetsFixed budgetsFinance/Accounting IssuesTypes of Budgets
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Copyright 2007 Prentice HallCh 8-*Central to strategy implementation integrative, intensive, & diversification strategies often implemented through acquisitions of other firmsFinance/Accounting IssuesEvaluating Worth of a Business
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Copyright 2007 Prentice HallCh 8-*What a firm ownsWhat a firm earnsWhat a firm will bring in the marketFinance/Accounting IssuesEvaluating Worth of a Business:3 Basic Approaches
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Copyright 2007 Prentice HallCh 8-*Worth of a Business AnalysisSouthwest AirlinesStockholders Equity:$ 5,524Net Income: 313Stock Price: 15.70EPS: .45Shares Outstanding 784Company Worth AnalysisStockholders Equity $ 5,524Net Income x 5 1,565Share Price/EPS x NI 10,920# Shares x Share Price 12,309
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Copyright 2007 Prentice HallCh 8-*Research & Development Issues -- New products and improvement of existing products that allow for effective strategy implementation
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Copyright 2007 Prentice HallCh 8-*Level of support constrained by resource availabilityTechnological improvements shorten product life cyclesResearch & Development IssuesConstraints
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Copyright 2007 Prentice HallCh 8-*1st firm to market new technological productsInnovative imitator of successful productsLow-cost producer of similar but less expensive productsResearch & Development Issues3 Major R&D approaches to implementing strategies
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Copyright 2007 Prentice HallCh 8-*Management Information Systems (MIS) Issues -- Information is the basis for understanding the firm. One of the most important factors differentiating successful from unsuccessful firms
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Copyright 2007 Prentice HallCh 8-*Information collection, retrieval, & storageKeeping managers informedCoordination of activities among divisionsAllow firm to reduce costsMIS IssuesFunctions of MIS
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Copyright 2007 Prentice HallCh 8-* Key Terms & ConceptsFor Review (Chapter 8)Cash BudgetMarketing Mix VariablesEPS/EBIT AnalysisOutstanding Shares MethodManagement Information Systems (MIS)Price-Earnings Ratio MethodMarket SegmentationProduct Positioning
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Copyright 2007 Prentice HallCh 8-* Key Terms & ConceptsFor Review (Chapter 8)Projected Financial Statement AnalysisResearch & Development (R&D)Vacant Niche
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