1. Strategic Management: Concepts & Cases
Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues
Strategic Management: Concepts & Cases
13th Edition
Fred David
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3. Implementing Strategies
“The greatest strategy is doomed if it’s implemented badly.”
– Bernard Reimann
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4. The Nature of Strategy Implementation
Less than 10% of strategies formulated are successfully implemented!
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5. Marketing Issues Marketing decisions requiring policies
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
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7. Current Marketing Issues
Advertising media
Purpose-based marketing
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8. Marketing Issues Market segmentation Product positioning
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9. Marketing Issues
Market Segmentation
Subdividing of a market into distinct subsets of customers according to needs and buying habits
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10. Market Segmentation Market Segment Basis Geographic Demographic
Psychographic
Behavioral
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11. Market Segmentation
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
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12. Product Place Promotion Price Marketing Mix Variables
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13. Marketing Issues Product Positioning
Schematic representations that reflect how products/services compare to competitors’ on dimensions most important to success in the industry
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14. Product Positioning Steps
Select key criteria
Diagram map
Plot competitors’ products
Look for niches
Develop marketing plan
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15. Product-Positioning Map for Banks
Personal
Bank B
Bank A
Bank C
Aggressive
Conservative
Bank D
Bank E
Impersonal
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16. Product-Positioning Map for Personal Computers
High Capability
Firm 1
Firm 2
Good Customer Service
Bad Customer Service
Firm 4
Firm 3
Low Capability
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17. Product-Positioning Map for Menswear Retail Stores
Very latest, fashionable menswear
Average specialty chain
Low Price
High Price
Average mass merchandiser or discounter
Average department store
Conservative, everyday menswear
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18. Product-Positioning Map for the Rental Car Market
High Convenience
Firm 1
Firm 2
High Customer Loyalty
Low Customer Loyalty
Firm 3
Low Convenience
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19. 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
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20. Finance/Accounting Issues
Acquiring needed capital
Developing projected financial statements
Preparing financial budgets
Evaluating the worth of a business
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21. Finance/Accounting Issues
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
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22. Finance/Accounting Issues
Debt vs. Equity Decisions
EPS/EBIT analysis
Earnings per share/earnings before interest and taxes
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24. Finance/Accounting Issues
Projected Financial Statement Analysis
Allows an organization to examine the expected results of various actions and approaches
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25. Finance/Accounting Issues
Steps in Preparing Projected Financial Statements
Prepare income statement before balance sheet (forecast sales)
Use percentage of sales method to project CGS & expenses
Calculate projected net income
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26. Finance/Accounting Issues
Steps in Preparing Projected Financial Statements (cont’d)
Subtract dividends to be paid from net income and add remaining to retained earnings
Project balance sheet items beginning with retained earnings
List comments (remarks) on projected statements
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27. Projected Income Statement
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28. Projected Balance Sheet
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29. Finance/Accounting Issues
Financial Budget
Details how funds will be obtained and spent for a specified period of time
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30. 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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31. Finance/Accounting Issues
Evaluating Worth of a Business
Central to strategy implementation – integrative, intensive, and diversification strategies often implemented through acquisitions of other firms
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32. Evaluating Worth of a Business
Three Basic Approaches
What a firm owns
What a firm earns
What a firm will bring in the market
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33. 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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35. Research & Development Issues
New products and improvement of existing products that allow for effective strategy implementation
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36. Research & Development Issues
Constraints
Level of support constrained by resource availability
Technological improvements shorten product life cycles
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37. Research & Development Issues
Three Major R&D Approaches to Implementing Strategies
First firm to market new technological products
Innovative imitator of successful products
Low-cost producer of similar but less expensive products
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38. Management Information Systems (MIS) Issues
Having an effective management information system (MIS) may be the most important factor in differentiating successful from unsuccessful firms.
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39. MIS Issues Functions of MIS
Information collection, retrieval, and storage
Keeping managers informed
Coordination of activities among divisions
Allows firm to reduce costs
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