Chapter 8 Implementing Strategies: Marketing, Finance ... · PDF fileFinance/Accounting Issues...
Transcript of Chapter 8 Implementing Strategies: Marketing, Finance ... · PDF fileFinance/Accounting Issues...
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Chapter 8
Implementing Strategies: Marketing,
Finance/Accounting, R&D, and MIS Issues
Strategic Management:
Concepts & Cases
13th Edition
Fred David
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“The greatest strategy is doomed
if it’s implemented badly.”
– Bernard Reimann
Implementing Strategies
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Less than 10% of strategies formulated
are successfully implemented!
The Nature of Strategy
Implementation
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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
Marketing Issues
Marketing decisions requiring policies
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Current Marketing Issues
Advertising media
Purpose-based marketing
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Market segmentation
Product positioning
Marketing Issues
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Subdividing of a market into distinct subsets of customers according to needs and buying habits
Marketing Issues
Market Segmentation
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Market Segmentation
Market Segment
Basis Psychographic
Behavioral
Geographic
Demographic
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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
Market Segmentation
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Product
Place
Promotion
Price
Marketing Mix Variables
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Marketing Issues
Schematic representations that reflect
how products/services compare to
competitors’ on dimensions most
important to success in the industry
Product Positioning
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Product Positioning Steps
1. Select key criteria
2. Diagram map
3. Plot competitors’ products
4. Look for niches
5. Develop marketing plan
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Product-Positioning Map for Banks
Personal
Impersonal
Aggressive Conservative
Bank A
Bank B
Bank C
Bank D
Bank E
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Product-Positioning Map for Personal
Computers High Capability
Low Capability
Good Customer
Service
Bad Customer
Service
Firm 1
Firm 2
Firm 3
Firm 4
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Product-Positioning Map for
Menswear Retail Stores Very latest, fashionable
menswear
Conservative, everyday
menswear
Low Price High Price
Average
department store
Average specialty
chain
Average mass
merchandiser or
discounter
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Product-Positioning Map for the
Rental Car Market High Convenience
Low Convenience
High Customer
Loyalty
Low Customer
Loyalty
Firm 1
Firm 2
Firm 3
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Look for a vacant niche
Don’t serve two segments with the same strategy
Don’t position yourself in the middle of the map
Product Positioning
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Finance/Accounting Issues
Acquiring needed capital
Developing projected financial statements
Preparing financial budgets
Evaluating the worth of a business
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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
Finance/Accounting Issues
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EPS/EBIT analysis Earnings per share/earnings before interest
and taxes
Finance/Accounting Issues
Debt vs. Equity Decisions
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Allows an organization to examine the expected results of various actions and approaches
Finance/Accounting Issues
Projected Financial Statement Analysis
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1. Prepare income statement before balance sheet (forecast sales)
2. Use percentage of sales method to project CGS & expenses
3. Calculate projected net income
Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements
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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
Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements (cont’d)
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Projected Income Statement
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Projected Balance Sheet
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Details how funds will be obtained and spent for a specified period of time
Finance/Accounting Issues
Financial Budget
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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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Central to strategy implementation – integrative, intensive, and diversification strategies often implemented through acquisitions of other firms
Finance/Accounting Issues
Evaluating Worth of a Business
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1. What a firm owns
2. What a firm earns
3. What a firm will bring in the market
Evaluating Worth of a Business
Three Basic Approaches
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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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Research & Development Issues
New products and improvement of
existing products that allow for effective
strategy implementation
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Level of support constrained by resource availability
Technological improvements shorten product life cycles
Research & Development Issues
Constraints
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1. First firm to market new technological
products
2. Innovative imitator of successful products
3. Low-cost producer of similar but less
expensive products
Research & Development Issues
Three Major R&D Approaches to
Implementing Strategies
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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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Information collection, retrieval, and storage
Keeping managers informed
Coordination of activities among divisions
Allows firm to reduce costs
MIS Issues
Functions of MIS
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Reference
David, Fred. R. (2009). Strategic
Management Concepts (12th ed.). Upper
Saddle River, NJ: Prentice Hall.
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