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Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues. Strategic Management: Concepts and Cases . 9 th edition Fred R. David PowerPoint Slides by Anthony F. Chelte Western New England College. Chapter Outline. The Nature of Strategy Implementation

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chapter 8 implementing strategies marketing finance accounting r d and mis issues
Chapter 8Implementing Strategies:Marketing, Finance/Accounting, R&D, and MIS Issues

Strategic Management:

Concepts and Cases. 9th edition

Fred R. David

PowerPoint Slides by

Anthony F. Chelte

Western New England College

Fred R. David

Prentice Hall

chapter outline
Chapter Outline
  • The Nature of Strategy Implementation
  • Marketing Issues
  • Research and Development (R&D) Issues

Fred R. David

Prentice Hall

chapter outline3
Chapter Outline
  • Finance/Accounting Issues
  • Management Information Systems Issues

Fred R. David

Prentice Hall

implementing strategies
Implementing Strategies

There is no “perfect” strategic decision. One always has to pay a price. One always has to balance conflicting objectives, conflicting opinions, and conflicting priorities. The best strategic decision is only an approximation—and a risk

-- Peter Drucker

Fred R. David

Prentice Hall

slide5

Implementing Strategies

Strategy implementation means change

Fred R. David

Prentice Hall

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Implementing Strategies:

Less than 10% of strategies formulated

are successfully implemented!

Fred R. David

Prentice Hall

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Implementing Strategies:

Low strategy implementation success:

  • 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

Fred R. David

Prentice Hall

slide8

Implementing Strategies:

For Successful Strategy Implementation --

  • Firms must market goods and services well
  • Firms must raise needed working capital
  • Firms produce technologically-sound goods
  • Firms must have sound information systems

Fred R. David

Prentice Hall

slide9

Marketing Issues

Marketing variables affect success or failure of strategy implementation

  • Market Segmentation
  • Production Positioning

Fred R. David

Prentice Hall

strategy analysis choice

Implementing Strategies: Marketing Issues

Strategy Analysis & Choice

Marketing Decisions requiring polices –

  • Use exclusive dealerships or multiple channels of distribution
  • Use heavy, light, or no TV advertising
  • Limit (or not) the share of business done with a single customer

Fred R. David

Prentice Hall

strategy analysis choice11

Implementing Strategies: Marketing Issues

Strategy Analysis & Choice

Marketing Decisions requiring polices –

  • Be a price leader or price follower
  • Offer a complete or limited warranty
  • Reward salespeople based on straight commission or combination salary/commission

Fred R. David

Prentice Hall

slide12

Market Segmentation

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

Fred R. David

Prentice Hall

slide13

Market Segmentation

  • Widely used in implementing strategies
  • Small and specialized firms

Fred R. David

Prentice Hall

slide14

Market Segmentation

Market Segmentation Important Variable:

  • Market and product development, market penetration, and diversification require increased sales through new markets or products

Fred R. David

Prentice Hall

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Market Segmentation

Market Segmentation Important Variable:

  • Firm can operate with limited resources. Enables a small firm by maximizing per-unit profits and per-segment sales.

Fred R. David

Prentice Hall

slide16

Market Segmentation

Market Segmentation Important Variable:

  • Segmentation decisions directly affect marketing mix variables:
    • Product, place, promotion, and price

Fred R. David

Prentice Hall

marketing mix component factors

Product

Place

Promotion

Price

Quality

Distribution channels

Advertising

Level

Features

Distribution coverage

Personal selling

Discounts & allowances

Style

Outlet location

Sales promotion

Payment terms

Brand name

Sales territories

Publicity

Packaging

Inventory levels/locations

Product line

Transportation carriers

Warranty

Service level

Marketing Mix – Component Factors

Fred R. David

Prentice Hall

slide18

Market Segmentation

Bases for Segmenting Markets --

  • Geographic
  • Demographic
  • Psychographic
  • Behavioral

Fred R. David

Prentice Hall

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Market Segmentation

Geographic Basis:

  • Region
  • County Size
  • City or SMSA size
  • Density
  • Climate

Fred R. David

Prentice Hall

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Market Segmentation

Demographic Basis:

  • Age
  • Family Size
  • Family Life Cycle
  • Income Occupation
  • Education
  • Religion
  • Race Nationality

Fred R. David

Prentice Hall

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Market Segmentation

Psychographic Basis:

  • Social Class
  • Lifestyle
  • Personality

Fred R. David

Prentice Hall

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Market Segmentation

Behavioral Basis:

  • Use occasion
  • Benefits sought
  • User status
  • Usage rate
  • Loyalty status
  • Readiness Stage
  • Attitude toward product

Fred R. David

Prentice Hall

slide23

Product Positioning

Developing schematic representations that reflect how products or services compare to competitors’ on dimensions most important to success in the industry

Fred R. David

Prentice Hall

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Product Positioning

Product Positioning based on:

  • Customers wants
  • Customers needs

Fred R. David

Prentice Hall

product positioning steps
Product Positioning Steps

1. Select Key Criteria

2. Diagram Map

Product

Positioning

Steps

  • Plot competitors’

products

4. Look for niches

5. Develop Marketing Plan

Fred R. David

Prentice Hall

product positioning map
Product Positioning Map

High

Convenience

Rental Car Market

Firm 1

Firm 2

High

Customer

Loyalty

Low

Customer

Loyalty

Firm 3

Low

Convenience

Fred R. David

Prentice Hall

slide27

Product Positioning

Product Positioning Map 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

Fred R. David

Prentice Hall

finance accounting issues
Finance/Accounting Issues

Central to Strategy Implementation –

  • Acquiring needed capital
  • Developing pro forma financial statements
  • Preparing financial budgets
  • Evaluating worth of a business

Fred R. David

Prentice Hall

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Decisions Requiring Finance/Accounting Policies

Raise capital w/ short-term, long-term preferred or common stock

Lease or buy fixed assets

Determine an appropriate dividend payout ratio

Use LIFO, FIFO, or market-value accounting approach

Fred R. David

Prentice Hall

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Decisions Requiring Finance/Accounting Policies

Extend time of accounts receivable

Establish percentage discount on accounts for terms

Determine the amount of cash kept on hand

Fred R. David

Prentice Hall

finance accounting issues31
Finance/Accounting Issues

Acquiring Capital to Implement Strategies –

  • Basic sources of capital:
    • Debt
    • Equity

Fred R. David

Prentice Hall

finance accounting issues32
Finance/Accounting Issues

Debt vs. Equity Decisions –

  • EPS/EBIT analysis
    • Earnings per share/Earnings before interest and taxes

Fred R. David

Prentice Hall

finance accounting issues33
Finance/Accounting Issues

Pro Forma Financial Statements -

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

Fred R. David

Prentice Hall

finance accounting issues34
Finance/Accounting Issues

6 Steps in Pro Forma Financial Analysis

  • Prepare income statement before balance sheet (forecast sales)
  • Use percentage-of-sales method to project CGS and expenses
  • Calculate projected net income
  • Subtract dividends to be paid from Net Income and add remaining to Retained Earnings
  • Project balance sheet times beginning with retained earnings
  • List comments (remarks) on projected statements

Fred R. David

Prentice Hall

finance accounting issues35
Finance/Accounting Issues

Financial Budget –

Document that details how funds will be obtained and spent for a specified period of time.

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Prentice Hall

finance accounting issues36
Finance/Accounting Issues

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

Fred R. David

Prentice Hall

evaluating worth of a business
Evaluating Worth of a Business

Central to strategy implementation as integrative, intensive and diversification strategies are often implement through acquisitions of other firms.

Fred R. David

Prentice Hall

evaluating worth of a business38
Evaluating Worth of a Business

3 Basic approaches:

  • What a firm owns
  • What a firm earns
  • What a firm will bring in the market

Fred R. David

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research development issues
Research & Development Issues

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

Fred R. David

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research development issues40
Research & Development Issues
  • Level of support is constrained by resource availability
  • Technological improvements shorten product life cycles

Fred R. David

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research development issues41
Research & Development Issues

3 Major R&D approaches to implementing strategies –

  • First firm to market new technological products
  • Be an innovative imitator of successful products
  • Low-cost producer of similar but less expensive products

Fred R. David

Prentice Hall

key terms
Key Terms
  • Cash Budget
  • E-mail
  • EPS/EBIT Analysis
  • Financial Budget
  • Information Systems
  • Market Segmentation
  • Marketing-mix Variables

Fred R. David

Prentice Hall

key terms43
Key Terms
  • Multidimensional Scaling
  • Outstanding Shares Method
  • Price-earnings Ratio Method
  • Pro Forma Financial Statement Analysis
  • Product Positioning

Fred R. David

Prentice Hall

key terms44
Key Terms
  • Research and Development
  • Retained Earnings
  • Vacant Niche
  • World Wide Web

Fred R. David

Prentice Hall