Transcript Chapter 8: Implementing Strategies

Module 8
Implementing Strategies: Marketing,
Finance/Accounting, R&D, and MIS Issues
Ch 8 -1
Ch 8 -2
Implementing Strategies
“The greatest strategy is doomed
if it’s implemented badly.”
– Bernard Reimann
Ch 8 -3
The Nature of Strategy
Implementation
Less than 10% of strategies formulated
are successfully implemented!
Ch 8 -4
Marketing Issues
Marketing decisions requiring policies
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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
Ch 8 -5
Ch 8 -6
Current Marketing Issues
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Advertising media
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Purpose-based marketing
Ch 8 -7
Marketing Issues
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Market segmentation
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Product positioning
Ch 8 -8
Marketing Issues
Market Segmentation
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Subdividing of a market into
distinct subsets of customers
according to needs and buying
habits
Ch 8 -9
Market Segmentation
Geographic
Demographic
Market Segment
Basis
Psychographic
Behavioral
Ch 8 -10
Market Segmentation
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Market-development, productdevelopment, 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
Ch 8 -11
Marketing Mix Variables
Product
 Place
 Promotion
 Price
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Ch 8 -12
Marketing Issues
Product Positioning
Schematic representations that reflect
how products/services compare to
competitors’ on dimensions most
important to success in the industry
Ch 8 -13
Product Positioning Steps
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Select key criteria
Diagram map
Plot competitors’ products
Look for niches
Develop marketing plan
Ch 8 -14
Product-Positioning Map for Banks
Personal
Bank B
Bank A
Bank C
Aggressive
Conservative
Bank D
Bank E
Impersonal
Ch 8 -15
Product-Positioning Map for Personal
Computers
High Capability
Firm 1
Firm 2
Good Customer
Service
Firm 4
Bad Customer
Service
Firm 3
Low Capability
Ch 8 -16
Product-Positioning Map for
Menswear Retail Stores
Very latest, fashionable
menswear
Low Price
Average mass
merchandiser or
discounter
Average specialty
chain
High Price
Average
department store
Conservative, everyday
menswear
Ch 8 -17
Product-Positioning Map for the
Rental Car Market
High Convenience
Firm 1
Firm 2
High Customer
Loyalty
Low Customer
Loyalty
Firm 3
Low Convenience
Ch 8 -18
Product Positioning
 Look
for a vacant niche
 Don’t serve two segments with
the same strategy
 Don’t position yourself in the
middle of the map
Ch 8 -19
Finance/Accounting Issues
Acquiring needed capital
 Developing projected financial
statements
 Preparing financial budgets
 Evaluating the worth of a business
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Ch 8 -20
Finance/Accounting Issues
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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
Ch 8 -21
Finance/Accounting Issues
Debt vs. Equity Decisions
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EPS/EBIT analysis
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Earnings per share/earnings before interest
and taxes
Ch 8 -22
Ch 8 -23
Finance/Accounting Issues
Projected Financial Statement Analysis
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Allows an organization to examine the
expected results of various actions and
approaches
Ch 8 -24
Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements
1.
Prepare income statement before
balance sheet (forecast sales)
2.
Use percentage of sales method to
project CGS & expenses
3.
Calculate projected net income
Ch 8 -25
Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements (cont’d)
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
Ch 8 -26
Projected Income Statement
Ch 8 -27
Projected Balance Sheet
Ch 8 -28
Finance/Accounting Issues
Financial Budget
Details how funds will be obtained
and spent for a specified period of
time
Ch 8 -29
Types of Budgets
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Cash budgets
Operating budgets
Sales budgets
Profit budgets
Factory budgets
Capital budgets
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Expense budgets
Divisional budgets
Variable budgets
Flexible budgets
Fixed budgets
Ch 8 -30
Finance/Accounting Issues
Evaluating Worth of a Business
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Central to strategy implementation –
integrative, intensive, and
diversification strategies often
implemented through acquisitions of
other firms
Ch 8 -31
Evaluating Worth of a Business
Three Basic Approaches
1.
What a firm owns
2.
What a firm earns
3.
What a firm will bring in the market
Ch 8 -32
Evaluating Worth of a Business
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
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Ch 8 -33
Ch 8 -34
Research & Development Issues
New products and improvement of
existing products that allow for effective
strategy implementation
Ch 8 -35
Research & Development Issues
Constraints
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Level of support constrained by resource
availability
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Technological improvements shorten
product life cycles
Ch 8 -36
Research & Development Issues
Three Major R&D Approaches to
Implementing Strategies
1.
First firm to market new technological
products
2.
Innovative imitator of successful products
3.
Low-cost producer of similar but less
expensive products
Ch 8 -37
Management Information
Systems (MIS) Issues
Having an effective management
information system (MIS) may be the
most important factor in differentiating
successful from unsuccessful firms.
Ch 8 -38
MIS Issues
Functions of MIS
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Information collection, retrieval, and
storage
Keeping managers informed
Coordination of activities among divisions
Allows firm to reduce costs
Ch 8 -39