1. Bus 411
Day 13
Copyright 2005 Prentice Hall

2. Agenda Assignment 4 corrected Assignment 5 posted Mid term Exam
2 A’s, 4 B’s and 2 MIA’s
Assignment 5 posted
Due March 9:30 AM
Mid term Exam
Available March 16  Due March 27
20 Short 5 points each
Changes to course schedule
3 Oral Case studies?
2 Oral and 1 Written Case study?
Discussion on Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues
Copyright 2005 Prentice Hall

3. Option 1 3 case studies presentations @ 8.33333% = 25 %
Mar 17
Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues
Chapter 8
Mar 20
Strategy Review, Evaluation and Control – pick groups and cases
Chapter 9
Mar 24
How to Prepare and Present a Case Study
Pages in text
Mar 27
Case 1 (Instructor)
Mid term due
Mar 31
Group work
Apr 3
Case 2 (Group 1)
Apr 7
Case 3 (Group 2)
Apr 10
Case 4 (Instructor)
Apr 14
Case 5 (Group 1)
Apr 17
Case 6 (Group 2)
Apr 21
Case 7 (Group 1)
Apr 24
Case 8 (Group 2)
Apr 31
Take home final assigned
May 1
Free day
May 8AM
In class portion of Final Exam
May 8
Turn in Take home portion of Final Exam by 3PM
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

4. Option 2 2 case study presentations @ 7.5% = 15%
1 written case study @ 10% =10%
Mar 17
Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues
Chapter 8
Mar 20
Strategy Review, Evaluation and Control
Chapter 9
Mar 24
How to Prepare and Present a Case Study
Pages in text
Mar 27
Case 1 (Instructor)
Mar 31
Group work
Apr 3
Case 2 (Group 1)
Apr 7
Case 3 (Group 2)
Apr 10
Case 4 (Instructor)
Apr 14
Apr 17
Case 5 (Group 1)
Apr 21
Case 6 (Group 2)
Apr 24
Free day
Apr 31
Take home final assigned
Written case study due
May 1
May 8AM
In class portion of Final Exam
May 8
Turn in Take home portion of Final Exam by 3PM
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

5. Strategic Management: Concepts & Cases
Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues
Strategic Management: Concepts & Cases
12th Edition
Fred David
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

6. Chapter Outline The Nature of Strategy Implementation Marketing Issues
Finance/Accounting Issues
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

7. Chapter Outline (cont’d)
Research & Development (R&D) Issues
Management Information Systems (MIS) Issues
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

8. Implementing Strategies
“The greatest strategy is doomed if it’s implemented badly.”
– Bernard Reimann
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

9. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

10. The Nature of Strategy Implementation
– Strategy implementation means change
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

11. The Nature of Strategy Implementation
– Less than 10% of strategies formulated are successfully implemented!
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

12. The Nature of Strategy Implementation
Low Success Rate – Strategy Implementation
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
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

13. The Nature of Strategy Implementation
Successful Strategy Implementation
Market goods & services well
Raise needed working capital
Produce technologically sound goods
Sound information systems
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

14. Marketing Issues
– Marketing variables affect success/failure of strategy implementation
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

15. Marketing Issues Marketing decisions requiring policies
Exclusive dealerships – multiple channels of distribution
Heavy, light, or no TV advertising
Price leader or price follower
Advertise online or not
Offer complete or limited warranty
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

16. Marketing Issues Centrally important to Implementation
Market segmentation
Product positioning
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

17. Marketing Issues Market Segmentation
Subdividing of a market into distinct subsets of customers according to needs and buying habits
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

18. Marketing Issues Market Segmentation Key to matching supply & demand
Market-development, product-development, market-penetration, and diversification strategies
Allows operating with limited resources
Enables small firms to compete successfully
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

19. Marketing Issues Market Segmentation
Directly affect marketing mix variables:
Product
Place
Promotion
Price
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

20. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

21. Marketing Issues Market Segment Basis Geographic Demographic
Psychographic
Behavioral
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

22. Marketing Issues Geographic Region County size
City or SMSA size (Standard Metropolitan Statistical Area)
Density
Climate
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

23. Marketing Issues Market Segment Basis Geographic Demographic
Psychographic
Behavioral
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

24. Marketing Issues Demographic Age Family size Family life cycle
Income/occupation
Education
Religion
Race/nationality
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

25. Marketing Issues Market Segment Basis Geographic Demographic
Psychographic
Behavioral
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

26. Marketing Issues Psychographic Social class Lifestyle Personality
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

27. Marketing Issues Market Segment Basis Geographic Demographic
Psychographic
Behavioral
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

28. Marketing Issues Behavioral Use occasion Benefits sought User status
Usage rate
Loyalty status
Readiness stage
Attitude toward product
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

29. Marketing Issues Product Positioning
– Schematic representations that reflect how products/services compare to competitors’ on dimensions most important to success in the industry
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

30. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

31. Marketing Issues Product Positioning Customer Wants Customer Needs
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

32. Product Positioning Steps
1. Select Key Criteria
2. Diagram Map
Product-Positioning
Steps
Plot Competitors’
Products
4. Look for Niches
5. Develop Marketing Plan
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

33. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

34. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

35. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

36. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

37. Marketing Issues Product Positioning 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
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

38. Finance/Accounting Issues
– Central to strategy implementation
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

39. Finance/Accounting Issues
Essential for Implementation
Acquiring needed capital
Developing projected financial statements
Preparing financial budgets
Evaluating worth of a business
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

40. Finance/Accounting Issues
Decisions Based on Finance/Accounting
Raise capital – short-term, long-term, preferred, or common stock
Lease or buy fixed assets
Determine appropriate dividend payout ratio
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

41. Finance/Accounting Issues
Decisions Based on Finance/Accounting
LIFO, FIFO, or market-value accounting approach
Extend time of AR
Establish % discount on accounts for terms
Determine the amount of cash kept on hand
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

42. Finance/Accounting Issues
Capital Acquisition to Implement Strategies
Debt
Equity
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

43. Finance/Accounting Issues
Debt vs. Equity Decisions
EPS/EBIT analysis
Earnings per share/earnings before interest and taxes
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

44. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

45. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

46. EPS-EBIT Analysis (in $millions)
Heinz Company – Year End 2001
$Amount Needed: $500
Stock Price $40 (avg for month of Dec 2001)
EBIT Range $1000 to $2000
Tax Rate 175/673 = .26 = 26%
Interest Rate 5% (based on prime rate)
# Shares Outstanding 350 (million)
Prime Rate History
All data is from Dec 2001, all dollar amount are in millions
Copyright 2007 Prentice Hall

47. EPS-EBIT Analysis (in $millions) – Heinz Company
Stock Financing
Financing
Combination
60/40
High
Low
EBIT ($982.4 in 2001)
$2000
$1000
Interest (5%) 25 10
EBT
2000
1000
1975
975
1990
990
Taxes 26%
520
260
514
254
517
257
EAT
1480
740
1461
721
1473
733
# Shares outstanding
362.5
350
357.5
EPS
4.08
2.04
4.17
2.06
4.12
2.05
Copyright 2007 Prentice Hall

48. Finance/Accounting Issues
Projected Financial Statements
Allow an organization to examine the expected results of various actions and approaches
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

49. 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.
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

50. 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.
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

51. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

52. Finance/Accounting Issues
Financial Budget
– Details how funds will be obtained and spent for a specified period of time
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

53. Finance/Accounting Issues
Types of Budgets
Cash budgets
Operating budgets
Sales budgets
Profit budgets
Factory budgets
Expense budgets
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

54. Finance/Accounting Issues
Types of Budgets
Divisional budgets
Variable budgets
Flexible budgets
Fixed budgets
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

55. Finance/Accounting Issues
Evaluating Worth of a Business
Central to strategy implementation – integrative, intensive, and diversification strategies often implemented through acquisitions of other firms
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

56. Finance/Accounting Issues
Evaluating Worth of a Business:
Three Basic Approaches
What a firm owns
What a firm earns
What a firm will bring in the market
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

57. Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

58. Research & Development Issues
– New products and improvement of existing products that allow for effective strategy implementation
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

59. Research & Development Issues
Constraints
Level of support constrained by resource availability
Technological improvements shorten product life cycles
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

60. Research & Development Issues
Three Major R&D Approaches to Implementing Strategies
1st firm to market new technological products
Innovative imitator of successful products
Low-cost producer of similar but less expensive products
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

61. Management Information Systems (MIS) Issues
– Information is the basis for understanding the firm. It’s one of the most important factors differentiating successful from unsuccessful firms.
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

62. MIS Issues Functions of MIS
Information collection, retrieval, and storage
Keeping managers informed
Coordination of activities among divisions
Allow firm to reduce costs
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

63. For Review (Chapter 8) Key Terms & Concepts Cash Budget
Marketing Mix Variables
EPS/EBIT Analysis
Outstanding Shares Method
Management Information Systems (MIS)
Price-Earnings Ratio Method
Market Segmentation
Product Positioning
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

64. Projected Financial Statement Analysis Research & Development (R&D)
For Review (Chapter 8)
Key Terms & Concepts
Projected Financial Statement Analysis
Research & Development (R&D)
Vacant Niche
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall