1. Implementing strategies : marketing, finance, R&D and IS issues

2. Marketing Issues
To use exclusive dealership or multiple channel of distribution
To offer a complete or limited warranty
To use heavy, light or no TV advertising
To reward salesperson based on straight salary, straight commission, or combination
To limit (or not) the share of business done with a single customer
To advertise online or not
To be a price leader or price follower

3. Market Segmentation
Market segmentation can be defined as the subdividing of market into distinct subset of customer according to need and buying habits
Market segmentation is an important variable in strategy implementation for at least three major reason :
Strategies such as market development, product development new or improved market segmentation are required
Market segmentation allow a firm to operate with limited resource because mass production, mass marketing and mass advertising are not required
Marketing segmentation decision impact to marketing mix variable 4P

4. Alternative Bases for Market Segmentation
Geographic
Demographic
Psychographic
Behavioral
Region
Province
City size
Density
Climate
Age
Gender
Family size
Family life cycle
Income
Occupation
Education
Religion
Race
Nationality
Social class
Personality
Use occasion
Benefit sought
User status
Usage rate
Loyalty status
Readiness stage
Attitude toward product

5. The Marketing Mix Variables
Product
Place
Promotion
Price
Quality
Features & option
Style
Brand Name
Packaging
Product line
Warranty
Service level
Other services
Distribution Channel
Distribution Coverage
Outlet Location
Sales territories
Inventory level and location
Transportation carriers
Advertising
Personal selling
Sales promotion
Publicity
Level
Discounts and allowances
Payment term

6. Product Positioning
After markets has been segmented, we can target particular customer groups, the next step is to find out what customer need and want.
Product positioning is used for deciding how to meet the needs and wants of particular customers groups.
The following steps are required in product positioning :
Select key criteria that effectively differentiate products or service in the industry.
Diagram a two-dimensional product-positioning with specified criteria on axis
Plot major competitor’s product or service in the resultant four-quadrant matrix
Identify area in the positioning map, look for vacant areas (niche)
Develop a marketing plan to position the company’s product or service appropriately.

7. Product Positioning Maps
Personal
High Convenience
Bank B
Firm 1
Firm 2
Bank A
Bank C
High Cust’
Loyalty
Aggressive
Low Cust’
Loyalty
Conservative
Bank D
Firm 3
Bank E
Impersonal
Low Convenience
Rental Car
BANKS

9. Product Positioning Maps as a Tool
Some rules for using product positioning as a strategy implementation tool
Look for the hole or vacant niche. The best strategic opportunity may be an un-served segment
Don’t squat between segment. Any advantage from squatting (such as larger target market) is offset by a failure to satisfy one segment
Don’t serve two segment with the same strategy. Usually strategy successful with one segment can not be directly transferred to another segment
Don’t position yourself in the middle of the map. The middle usually means a strategy that is not clearly perceived to have any distinguishing characteristic

11. Finance / Accounting Issues
To raise capital with short-term debt, long-term debt, prefer stock, or common stock.
To lease or buy fixed assets
To determine an appropriate dividend payout ratio
To use LIFO (last in first out), FIFO (first in first out), or a market value accounting approach
To extend the time of account receivable
To establish a certain percentage discount on account within a specified period of time
To determine the amount of cash that should be kept on hand

12. Acquiring Capital to Implement Strategy
The basic source of additional of capital for an organization are debt and equity.
An Earning Per Share / Earning Before Interest and Taxes (EPS/EBIT) analysis is the most widely used technique for determining whether debt, stock or combination of debt and stock is the best alternative for rising capital to implement strategies.

20. Case : Brown Company
They need to rise $ 1 million to finance implementation of a market- development strategy
The company’s common stock currently sells $ 50 per share, and 100,000 shares are outstanding.
The prime interest rate is 10%, and the company tax rates is 50%.
The company’s EBIT next year are expected to be $ 2 million if recession occurs, $ 4 million if the economy stay as is, $ 8 million if economy significantly improve.

21. EPS/EBIT Analysis (in million)
Common Stock Financing
Debt Financing
Combination Financing
Recession
Normal
Boom
EBIT
$ 2.0
$ 4.0
$ 8.0
Interest
$ 0
$ 0.10
$ 0.05
EBT
$ 1.90
$ 3.90
$ 7.90
$ 1.95
$ 3.95
$ 7.95
Taxes
$ 1.0
$ 0.95
$.975
1.975
3.975
EAT
1.0
2.0
4.0
0.95
1.95
$ 3,95
0.975
#Shares
0.12
0.10
0.11
EPS ($)
8.33
16.66
33.33
9.5
19.50
39.50
8.86
17.95
36.14
Debt is the best financing alternative.

22. Projected Financial Statement
Projected financial statement analysis is a central strategy implementation technique because it allow to examine the expected result of various action and approach.
A projected income statement and balance sheet  to compute projected financial ratio under various strategy implementation.
Result of the Enron collapse and accounting scandal and the ensuing US Sarbanes-Oxley Act (SOA)  being much more diligent in preparing projected financial statement.

23. Projected Income Statement (in million)
Year 2007
Projected 2008
Remarks
Sales
$ 100
$ 150
50% increase
Cost of good sold 70
105
70% of sales
Gross Margin 30 45
Selling Expense 10 15
10% of sales
Administrative Expense 5
7.5
5% of sales
EBIT
22.5
Interest 3
Earning Before Tax 12
19.5
Taxes 6
9.75
50% rates
Net Income
Dividends 2
Retain Earning 4
4.75

24. Projected Balance Sheet
Year 2007
Projected 2008
Remarks
Assets
Current Assets 27
56.75
Fixed Assets 55 75
Total Assets 82
131.75
Liabilities
Current Liabilities 20
Long-term Debt 40 70
Borrowed $ 30 million
Additional Paid-in-capital 35
Issued 100,000 shares at $ 150 each
Retained Earning 2
6.75
$ 2 + $ 4.75
Total Liabilities & Net Worth

25. Financial Budget
Financial budget is a document that detail how funds will be obtained and spent for a specified period of time.
Financial budgeting is a method for specifying what must be done to complete strategy implementation successfully.
Common type of budgets include cash budget, operating budget, sales budgets, profit budgets, factory budgets, expense budget, divisional budgets, variable budgets, flexible budgets, and fixed budgets
Budget have some limitations :
Over budgeting or under budgeting caused a problem
Budgets can become substitute of objective
Budget can hide inefficiency
Budget are sometimes used as instruments of tyranny that result in frustration, resentment, absenteeism, and high turn over.

26. Research and Development (R&D)
R&D policies can enhance strategy implementation effort to :
Emphasis product or process improvement
Stress basic or applied research
Be leaders or followers in R&D
Develop robotic or manual type process
Spend a high, average, or low amount of money in R&D
Perform R&D within the firm or to contract R&D to outside firm
Use university researcher or private sector researcher
R & D person are generally charged with developing new product and improving old product in a way that will allow effective strategy implementation

27. Strategy being Implemented
R & D Activities
Type of Organization
Strategy being Implemented
R&D Activities
Pharmaceutical
Product Development
Test the effect of a new drug on different subgroup.
Boat Manufacturing
Related Diversification
Test the performance of various keel design under various condition.
Plastic Container Manufacturer
Market Penetration
Develop biodegradable container
Electronic Company
Market Development
Develop a telecommunication system in a foreign country.

28. Management Information System (MIS) Issues
MIS will not be an option in the future, but it will be a requirement
Information collection, retrieval and storage can be used to create competitive advantage in ways such as cross-selling to customer, monitoring supplier, managing funds etc
A good information system can allow a firm to reduce cost
In many firm, information technology is doing away the workplace and allowing employee to work at home or anywhere

29. Pelajari Case sesuai dengan kelompok anda. Identifikasi :
Tugas M10
Pelajari Case sesuai dengan kelompok anda.
Identifikasi :
marketing issues
Financial / accounting issues
R & D issues
MIS issues
Tidak ada struktur organisasi yang paling optimal, beda perusahaan beda organisasi yang cocok

30. Quiz
Sebuah perusahaan dibidang Telekomunikasi terkemuka dan sudah go public sedang mengimplementasikan Strategi Market Development mebutuhkan dana sebesar Rp 100 Milyard untuk mendapatkan dana tersebut terdapat 3 alternatif : Common Stock (menjual saham), Debt (pinjaman dari Bank) atau Combination ( 50% common stock dan 50% debt).
Situasi Perusahaan saat ini sbb :
Jumlah saham beredar : 100 juta lembar, Harga per lembar saham : Rp ,-
Bunga pinjaman per tahun : 25% Pajak perusahaan sebesar 30%
Perusahaan memproyeksikan EBIT tahun depan sebesar Rp 300 Milyard
Pertanyaan :
Dengan menggunakan tool EPS / EBIT Analysis ( R David page 294) alternative mana yang paling menguntungkan bagi perusahaan untuk mendapatkan dana tersebut

31. Prety
Dina
Iqbal
Retno.