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

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62 views

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

Uploaded by

saad bin sadaqat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Chapter 8

Implementing Strategies: Marketing,


Finance/Accounting, R&D, and MIS Issues

Strategic Management:
Concepts & Cases
13th Edition
Fred David

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -1


Raja Rub Nawaz Publishing as Prentice Hall
From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -2
Raja Rub Nawaz Publishing as Prentice Hall
Implementing Strategies

“The greatest strategy is doomed


if it’s implemented badly.”
– Bernard Reimann

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -3


Raja Rub Nawaz Publishing as Prentice Hall
The Nature of Strategy
Implementation

Less than 10% of strategies formulated


are successfully implemented!

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -4


Raja Rub Nawaz Publishing as Prentice Hall
The Nature of Strategy
Implementation
There 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

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -5


Raja Rub Nawaz Publishing as Prentice Hall
Marketing Issues
Countless marketing variables affect
the success or failure of Strategy
Implementation (SI). Two variables
are of central importance to SI:

 Market segmentation

 Product positioning

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -6


Raja Rub Nawaz Publishing as Prentice Hall
Marketing Issues
Market Segmentation

 Subdividing of a market into


distinct subsets of customers
according to needs and buying
habits

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -7


Raja Rub Nawaz Publishing as Prentice Hall
Market Segmentation

Geographic

Demographic

Market Segment
Basis Psychographic

Behavioral

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -8


Raja Rub Nawaz Publishing as Prentice Hall
Market Segmentation
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.

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -9


Raja Rub Nawaz Publishing as Prentice Hall
Marketing Mix Variables
Market Segmentation decisions directly
affect marketing mix variables, as
indicated in Table 8-3:
 Product

 Place

 Promotion

 Price

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -10


Raja Rub Nawaz Publishing as Prentice Hall
Table 8-3

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -11


Raja Rub Nawaz Publishing as Prentice Hall
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.

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -12


Raja Rub Nawaz Publishing as Prentice Hall
Product Positioning Steps

1. Select key criteria


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

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -13


Raja Rub Nawaz Publishing as Prentice Hall
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
From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -14
Raja Rub Nawaz Publishing as Prentice Hall
Finance/Accounting Issues
There 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

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -15


Raja Rub Nawaz Publishing as Prentice Hall
Finance/Accounting Issues
Acquiring Needed Capital:

 Equity – common stock


 Debt - bonds
 Debt - borrow from lenders

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -16


Raja Rub Nawaz Publishing as Prentice Hall
Finance/Accounting Issues
 Debt vs. Equity Decisions
EPS/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.

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -17


Raja Rub Nawaz Publishing as Prentice Hall
Finance/Accounting Issues
Projected Financial Statement Analysis

 Allows an organization to examine the


expected results of various actions and
approaches

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -18


Raja Rub Nawaz Publishing as Prentice Hall
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


From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -19
Raja Rub Nawaz Publishing as Prentice Hall
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

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -20


Raja Rub Nawaz Publishing as Prentice Hall
Projected Income Statement

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -21


Raja Rub Nawaz Publishing as Prentice Hall
Projected Balance Sheet

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -22


Raja Rub Nawaz Publishing as Prentice Hall
Finance/Accounting Issues
Financial Budget

Details how funds will be obtained


and spent for a specified period of
time

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -23


Raja Rub Nawaz Publishing as Prentice Hall
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

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -24


Raja Rub Nawaz Publishing as Prentice Hall
Finance/Accounting Issues
Evaluating the Worth of a Business

 Central to strategy implementation –


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

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -25


Raja Rub Nawaz Publishing as Prentice Hall
Evaluating the Worth of a Business

There are three basic approaches

1. What a firm owns

2. What a firm earns

3. What a firm will bring in the market

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -26


Raja Rub Nawaz Publishing as Prentice Hall
Research & Development Issues

New products and improvement of


existing products that allow for effective
strategy implementation

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -27


Raja Rub Nawaz Publishing as Prentice Hall
Research & Development Issues

Constraints

 Level of support constrained by resource


availability

 Technological improvements shorten


product life cycles

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -28


Raja Rub Nawaz Publishing as Prentice Hall
Research & Development Issues
There are three major R&D approaches
to implementing strategies:
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.

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -29


Raja Rub Nawaz Publishing as Prentice Hall
Management Information
Systems (MIS) Issues

Having an effective management


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

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -30


Raja Rub Nawaz Publishing as Prentice Hall
MIS Issues
Functions of MIS

 Information collection, retrieval, and


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

From the Desk of Copyright © 2011 Pearson Education, Inc. Ch 8 -31


Raja Rub Nawaz Publishing as Prentice Hall

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