David Sm13 Ppt 08

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Ch 8 -1

Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues

Strategic Management: Concepts & Cases

13th EditionFred David


Ch 8 -2


Ch 8 -3

“The greatest strategy is doomed if it’s implemented badly.”– Bernard Reimann

Implementing Strategies


Ch 8 -4

Less than 10% of strategies formulated are successfully implemented!

The Nature of Strategy Implementation


Ch 8 -5

The Nature of Strategy ImplementationThere are many reasons for the low success rate

of Strategy Implementation. These include:

Failing to segment markets appropriately

Paying too much for a new acquisition

Falling behind competitors in R&D

Not recognizing benefit of computers in managing information


Ch 8 -6

Countless marketing variables affect the success or failure of Strategy Implementation (SI). Two variables are of central importance to SI:

Market segmentation

Product positioning

Marketing Issues


Ch 8 -7

Subdividing of a market into distinct subsets of customers according to needs and buying habits

Marketing Issues

Market Segmentation


Ch 8 -8

Market Segmentation

Market Segment Basis Psychographic

Behavioral

Geographic

Demographic


Ch 8 -9

Market Segmentation is an important variable in strategy implementation for three major reasons:

It is required to successfully implement market development, product development, market penetration, and diversification strategies.

It allows a firm to operate with limited resources because mass production, distribution, and advertising are not required.

It enables small firms to compete successfully with large firms by maximizing per-unit profits and per-segment sales.

Market Segmentation


Ch 8 -10

Market Segmentation decisions directly affect marketing mix variables, as indicated in Table 8-3:

Product

Place

Promotion

Price

Marketing Mix Variables


Ch 8 -11

Table 8-3


Ch 8 -12

Product Positioning

After markets have been segmented, the next step is to find out what customers in each segment need and want. Product Positioning is widely used for this purpose.

Product Positioning entails developing schematic representations that reflect how a firm’s products or services compare to competitors’ on dimensions most important to success in the industry.


Ch 8 -13

Product Positioning Steps

1. Select key criteria2. Diagram map3. Plot competitors’ products4. Look for niches5. Develop marketing plan


Ch 8 -14

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


Ch 8 -15

Finance/Accounting IssuesThere are several finance/accounting concepts that are central to strategy implementation. Some of the concepts essential for Strategy Implementation are:

Acquiring needed capital

Developing projected financial statements

Preparing financial budgets

Evaluating the worth of a business


Ch 8 -16

Acquiring Needed Capital:

Equity – common stock

Debt - bonds

Debt - borrow from lenders

Finance/Accounting Issues


Ch 8 -17


Debt vs. Equity DecisionsEPS/EBIT analysis

An Earnings Per Share/Earnings Before Interest and Taxes analysis is the most widely used method for determining whether debt, stock, or a combination of debt and stock is the best alternative for raising capital to implement strategies.

This method involves an examination of the impact that debt versus stock financing has on earnings per share under various assumptions as to EBIT.


Ch 8 -18

Allows an organization to examine the expected results of various actions and approaches


Projected Financial Statement Analysis


Ch 8 -19

1. Prepare income statement before balance sheet (forecast sales)

2. Use percentage of sales method to project CGS & expenses

3. Calculate projected net income


Steps in Preparing Projected Financial Statements


Ch 8 -20

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 IssuesSteps in Preparing Projected Financial Statements (cont’d)


Ch 8 -21

Projected Income Statement


Ch 8 -22

Projected Balance Sheet


Ch 8 -23

Details how funds will be obtained and spent for a specified period of time


Financial Budget


Ch 8 -24

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


Ch 8 -25

Central to strategy implementation – integrative, intensive, and diversification strategies often implemented through acquisitions of other firms


Evaluating the Worth of a Business


Ch 8 -26

1. What a firm owns

2. What a firm earns

3. What a firm will bring in the market

Evaluating the Worth of a Business

There are three basic approaches


Ch 8 -27

Research & Development Issues

New products and improvement of existing products that allow for effective strategy implementation


Ch 8 -28

Level of support constrained by resource availability

Technological improvements shorten product life cycles

Research & Development Issues

Constraints


Ch 8 -29

1. Be the first firm to market new technological products.

2. Be an innovative imitator of successful products.

3. Be a low-cost producer by mass-producing products similar to but less expensive than products recently introduced.

Research & Development IssuesThere are three major R&D approaches to implementing strategies:


Ch 8 -30

Management Information Systems (MIS) Issues

Having an effective management information system (MIS) may be the most important factor in differentiating successful from unsuccessful firms.


Ch 8 -31

Information collection, retrieval, and storage

Keeping managers informed

Coordination of activities among divisions

Allows firm to reduce costs

MIS Issues

Functions of MIS

David Sm13 Ppt 08

Documents

Transcript of David Sm13 Ppt 08