Ch 8 -1

Implementing Strategies: Marketing,

Finance/Accounting, R&D, and MIS Issues
Ch 8 -2
 Ch 8 -3

Implementing Strategies

“The greatest strategy is doomed

if it’s implemented badly.”
– Bernard Reimann
 Ch 8 -4

The Nature of Strategy

Implementation

Less than 10% of strategies formulated are

successfully implemented!
 Ch 8 -5

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 -6
 Ch 8 -7

Current Marketing Issues

• Advertising media

• Purpose-based marketing
 Ch 8 -8

Marketing Issues

• Market segmentation

• Product positioning
 Ch 8 -9

Marketing Issues
Market Segmentation

• Subdividing of a market into

distinct subsets of customers
according to needs and buying
habits
 Ch 8 -10

Market Segmentation

Geographic

Demographic

Market Segment
Basis Psychographic

Behavioral
 Ch 8 -11

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 -12

Marketing Mix Variables

• Product
• Place
• Promotion
• Price
 Ch 8 -13

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 -14

Product Positioning Steps

1. Select key criteria
2. Diagram map
3. Plot competitors’ products
4. Look for niches
5. Develop marketing plan
 Ch 8 -15

Product-Positioning Map for Banks

Personal

Bank B

Bank A Bank C
Aggressive Conservative
Bank D

Bank E

Impersonal
 Ch 8 -16

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 -17

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 -18

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 -19

Product Positioning

• Look for a vacant niche

• Don’t serve two segments with
the same strategy
• Don’t position yourself in the
middle of the map
 Ch 8 -20

Finance/Accounting Issues

• Acquiring needed capital

• Developing projected financial
statements
• Preparing financial budgets
• Evaluating the worth of a business
 Ch 8 -21

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 -22

Finance/Accounting Issues
Debt vs. Equity Decisions

• EPS/EBIT analysis
▫ Earnings per share/earnings before interest
and taxes
Ch 8 -23
 Ch 8 -24

Finance/Accounting Issues
Projected Financial Statement Analysis

• Allows an organization to examine the

expected results of various actions and
approaches
 Ch 8 -25

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 -26

Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements (cont’d)
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 -27

Projected Income Statement

 Ch 8 -28

Projected Balance Sheet

 Ch 8 -29

Finance/Accounting Issues
Financial Budget

Details how funds will be obtained

and spent for a specified period of
time
 -30

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
 -31

Finance/Accounting Issues
Evaluating Worth of a Business

• Central to strategy implementation –

integrative, intensive, and
diversification strategies often
implemented through acquisitions of
other firms
 -32

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

 -33

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
-34
 -35

Research & Development Issues

New products and improvement of

existing products that allow for effective
strategy implementation
 -36

Research & Development Issues

Constraints

• Level of support constrained by resource

availability

• Technological improvements shorten

product life cycles
 -37

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
 -38

Management Information
Systems (MIS) Issues

Having an effective management

information system (MIS) may be the
most important factor in
differentiating successful from
unsuccessful firms.
 -39

MIS Issues
Functions of MIS

• Information collection, retrieval, and

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