1. Strategic Management:
Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues
Strategic Management:
Concepts and Cases. 9th edition
Fred R. David
PowerPoint Slides by
Anthony F. Chelte
Western New England College
Fred R. David
Prentice Hall

2. Chapter Outline The Nature of Strategy Implementation Marketing Issues
Research and Development (R&D) Issues
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3. Chapter Outline Finance/Accounting Issues
Management Information Systems Issues
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4. Implementing Strategies
There is no “perfect” strategic decision. One always has to pay a price. One always has to balance conflicting objectives, conflicting opinions, and conflicting priorities. The best strategic decision is only an approximation—and a risk
-- Peter Drucker
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5. Implementing Strategies
Strategy implementation means change
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6. Implementing Strategies:
Less than 10% of strategies formulated
are successfully implemented!
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7. Implementing Strategies:
Low strategy implementation success:
Failing to segment markets appropriately
Paying too much for a new acquisition
Falling behind competition in R&D
Not recognizing benefit of computers in managing information
Fred R. David
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8. Implementing Strategies:
For Successful Strategy Implementation --
Firms must market goods and services well
Firms must raise needed working capital
Firms produce technologically-sound goods
Firms must have sound information systems
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9. Marketing Issues
Marketing variables affect success or failure of strategy implementation
Market Segmentation
Production Positioning
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10. Strategy Analysis & Choice
Implementing Strategies: Marketing Issues
Strategy Analysis & Choice
Marketing Decisions requiring polices –
Use exclusive dealerships or multiple channels of distribution
Use heavy, light, or no TV advertising
Limit (or not) the share of business done with a single customer
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11. Strategy Analysis & Choice
Implementing Strategies: Marketing Issues
Strategy Analysis & Choice
Marketing Decisions requiring polices –
Be a price leader or price follower
Offer a complete or limited warranty
Reward salespeople based on straight commission or combination salary/commission
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12. Market Segmentation
Subdividing of a market into distinct subsets of customers according to needs and buying habits
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13. Market Segmentation Widely used in implementing strategies
Small and specialized firms
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14. Market Segmentation Market Segmentation Important Variable:
Market and product development, market penetration, and diversification require increased sales through new markets or products
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15. Market Segmentation Market Segmentation Important Variable:
Firm can operate with limited resources. Enables a small firm by maximizing per-unit profits and per-segment sales.
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16. Market Segmentation Market Segmentation Important Variable:
Segmentation decisions directly affect marketing mix variables:
Product, place, promotion, and price
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17. Marketing Mix – Component Factors
Service level
Warranty
Transportation carriers
Product line
Inventory levels/locations
Packaging
Publicity
Sales territories
Brand name
Payment terms
Sales promotion
Outlet location
Style
Discounts & allowances
Personal selling
Distribution coverage
Features
Level
Advertising
Distribution channels
Quality
Price
Promotion
Place
Product
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18. Market Segmentation Bases for Segmenting Markets -- Geographic
Demographic
Psychographic
Behavioral
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19. Market Segmentation Geographic Basis: Region County Size
City or SMSA size
Density
Climate
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20. Market Segmentation Demographic Basis: Age Family Size
Family Life Cycle
Income Occupation
Education
Religion
Race Nationality
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21. Market Segmentation Psychographic Basis: Social Class Lifestyle
Personality
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22. Market Segmentation Behavioral Basis: Use occasion Benefits sought
User status
Usage rate
Loyalty status
Readiness Stage
Attitude toward product
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23. Product Positioning
Developing schematic representations that reflect how products or services compare to competitors’ on dimensions most important to success in the industry
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24. Product Positioning Product Positioning based on: Customers wants
Customers needs
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25. Product Positioning Steps
1. Select Key Criteria
2. Diagram Map
Product
Positioning
Steps
Plot competitors’
products
4. Look for niches
5. Develop Marketing Plan
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26. Product Positioning Map
High
Convenience
Rental Car Market
Firm 1 • •
Firm 2
High
Customer
Loyalty
Low
Customer
Loyalty •
Firm 3
Low
Convenience
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27. Product Positioning
Product Positioning Map as Strategy-Implementation Tool—
Look for vacant niche
Avoid suboptimization
Don’t serve 2 segments with same strategy
Don’t position in the middle of the map
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28. Finance/Accounting Issues
Central to Strategy Implementation –
Acquiring needed capital
Developing pro forma financial statements
Preparing financial budgets
Evaluating worth of a business
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29. Decisions Requiring Finance/Accounting Policies
Raise capital w/ short-term, long-term preferred or common stock
Lease or buy fixed assets
Determine an appropriate dividend payout ratio
Use LIFO, FIFO, or market-value accounting approach
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30. Decisions Requiring Finance/Accounting Policies
Extend time of accounts receivable
Establish percentage discount on accounts for terms
Determine the amount of cash kept on hand
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31. Finance/Accounting Issues
Acquiring Capital to Implement Strategies –
Basic sources of capital:
Debt
Equity
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32. Finance/Accounting Issues
Debt vs. Equity Decisions –
EPS/EBIT analysis
Earnings per share/Earnings before interest and taxes
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33. Finance/Accounting Issues
Pro Forma Financial Statements -
Allows an organization to examine the expected results of various actions and approaches
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34. Finance/Accounting Issues
6 Steps in Pro Forma Financial Analysis
Prepare income statement before balance sheet (forecast sales)
Use percentage-of-sales method to project CGS and expenses
Calculate projected net income
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 statements
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35. Finance/Accounting Issues
Financial Budget –
Document that details how funds will be obtained and spent for a specified period of time.
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36. Finance/Accounting Issues
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
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37. Evaluating Worth of a Business
Central to strategy implementation as integrative, intensive and diversification strategies are often implement through acquisitions of other firms.
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38. Evaluating Worth of a Business
3 Basic approaches:
What a firm owns
What a firm earns
What a firm will bring in the market
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39. Research & Development Issues
New products and improvement of existing products that allow for effective strategy implementation
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40. Research & Development Issues
Level of support is constrained by resource availability
Technological improvements shorten product life cycles
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41. Research & Development Issues
3 Major R&D approaches to implementing strategies –
First firm to market new technological products
Be an innovative imitator of successful products
Low-cost producer of similar but less expensive products
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42. Key Terms Cash Budget E-mail EPS/EBIT Analysis Financial Budget
Information Systems
Market Segmentation
Marketing-mix Variables
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43. Key Terms Multidimensional Scaling Outstanding Shares Method
Price-earnings Ratio Method
Pro Forma Financial Statement Analysis
Product Positioning
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44. Key Terms Research and Development Retained Earnings Vacant Niche
World Wide Web
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