Module 8

Implementing Strategies: Marketing,

Finance/Accounting, R&D, and MIS Issues

Ch 8 -1
Ch 8 -2
Implementing Strategies

The greatest strategy is doomed

if its implemented badly.
Bernard Reimann

Ch 8 -3
The Nature of Strategy
Implementation

Less than 10% of strategies formulated

are successfully implemented!

Ch 8 -4
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
Ch 8 -5
Ch 8 -6
Current Marketing Issues

Advertising media

Purpose-based marketing

Ch 8 -7
Marketing Issues

Market segmentation

Product positioning

Ch 8 -8
Marketing Issues
Market Segmentation

Subdividing of a market into

distinct subsets of customers
according to needs and buying
habits

Ch 8 -9
Market Segmentation

Geographic

Demographic

Market Segment
Basis Psychographic

Behavioral

Ch 8 -10
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
Ch 8 -11
Marketing Mix Variables
Product
Place

Promotion

Price

Ch 8 -12
Marketing Issues

Product Positioning

Schematic representations that reflect

how products/services compare to
competitors on dimensions most
important to success in the industry

Ch 8 -13
Product Positioning Steps

1. Select key criteria

2. Diagram map
3. Plot competitors products
4. Look for niches
5. Develop marketing plan

Ch 8 -14
Product-Positioning Map for Banks
Personal

Bank B

Bank A Bank C
Aggressive Conservative
Bank D

Bank E

Impersonal
Ch 8 -15
Product-Positioning Map for Personal
Computers High Capability

Firm 1

Firm 2

Good Customer Bad Customer

Service Firm 4 Service

Firm 3

Low Capability
Ch 8 -16
Product-Positioning Map for
Menswear Retail Stores
Very latest, fashionable
menswear

Average specialty
chain
Low Price High Price

Average mass
Average
merchandiser or
department store
discounter

Conservative, everyday
menswear
Ch 8 -17
Product-Positioning Map for the
Rental Car Market
High Convenience

Firm 1
Firm 2

High Customer Low Customer

Loyalty Loyalty

Firm 3

Low Convenience
Ch 8 -18
Product Positioning

Look for a vacant niche

Dont serve two segments with
the same strategy
Dont position yourself in the
middle of the map

Ch 8 -19
Finance/Accounting Issues

Acquiring needed capital

Developing projected financial
statements
Preparing financial budgets

Evaluating the worth of a business

Ch 8 -20
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

Ch 8 -21
Finance/Accounting Issues
Debt vs. Equity Decisions

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

Ch 8 -22
Ch 8 -23
Finance/Accounting Issues
Projected Financial Statement Analysis

Allows an organization to examine the

expected results of various actions and
approaches

Ch 8 -24
Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements
1. Prepare income statement before balance
sheet (forecast sales)

2. Use percentage of sales method to project

CGS & expenses

3. Calculate projected net income

Ch 8 -25
Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements (contd)
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

Ch 8 -26
Projected Income Statement

Ch 8 -27
Projected Balance Sheet

Ch 8 -28
Finance/Accounting Issues
Financial Budget

Details how funds will be obtained

and spent for a specified period of
time

Ch 8 -29
Types of Budgets

Cash budgets Expense budgets

Operating budgets Divisional budgets
Sales budgets Variable budgets
Profit budgets Flexible budgets
Factory budgets Fixed budgets
Capital budgets

Ch 8 -30
Finance/Accounting Issues
Evaluating Worth of a Business

Central to strategy implementation

integrative, intensive, and
diversification strategies often
implemented through acquisitions of
other firms

Ch 8 -31
 Evaluating Worth of a Business
Three Basic Approaches

1. What a firm owns

2. What a firm earns

3. What a firm will bring in the market

Ch 8 -32
Evaluating Worth of a Business

Net worth or stockholders equity

Net profit conservative value

would be five times the firms

current annual profits
Price-earnings ratio method

Outstanding shares method

Ch 8 -33
Ch 8 -34
Research & Development Issues

New products and improvement of

existing products that allow for effective
strategy implementation

Ch 8 -35
Research & Development Issues

Constraints

Level of support constrained by resource

availability

Technological improvements shorten

product life cycles

Ch 8 -36
 Research & Development Issues
Three Major R&D Approaches to
Implementing Strategies
1. First firm to market new technological
products

2. Innovative imitator of successful products

3. Low-cost producer of similar but less

expensive products
Ch 8 -37
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 -38
MIS Issues
Functions of MIS

Information collection, retrieval, and

storage
Keeping managers informed
Coordination of activities among divisions
Allows firm to reduce costs

Ch 8 -39