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Chapter 8

Implementing Strategies: Marketing,


Finance/Accounting, R&D, and MIS Issues

Strategic Management:
Concepts & Cases
13th Edition
Fred David

Copyright 2011 Pearson

Ch 8 -1

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Ch 8 -2

Implementing Strategies

The greatest strategy is doomed


if its implemented badly.
Bernard Reimann

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Ch 8 -3

The Nature of Strategy


Implementation
Less than 10% of strategies formulated
are successfully implemented!

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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
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Ch 8 -5

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Ch 8 -6

Current Marketing Issues

Advertising media

Purpose-based marketing

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Ch 8 -7

Marketing Issues

Market segmentation

Product positioning

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Ch 8 -8

Marketing Issues
Market Segmentation

Subdividing of a market into


distinct subsets of customers
according to needs and buying
habits
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Ch 8 -9

Market Segmentation
Geographic
Demographic

Market Segment
Basis

Psychographic
Behavioral

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Ch 8 -10

Market Segmentation

Market-development, productdevelopment, 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
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Ch 8 -11

Marketing Mix Variables

Product
Place
Promotion
Price

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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

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Ch 8 -13

Product Positioning Steps


1.
2.
3.
4.
5.

Select key criteria


Diagram map
Plot competitors products
Look for niches
Develop marketing plan
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Ch 8 -14

Product-Positioning Map for Banks


Personal
Bank B
Bank A

Bank C

Aggressive

Conservative
Bank D

Bank E

Impersonal

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Ch 8 -15

Product-Positioning Map for Personal


Computers
High Capability
Firm 1
Firm 2
Good Customer
Service

Firm 4

Bad Customer
Service

Firm 3

Low Capability

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Ch 8 -16

Product-Positioning Map for


Menswear Retail Stores
Very latest, fashionable
menswear

Low Price
Average mass
merchandiser or
discounter

Average specialty
chain
High Price
Average
department store

Conservative, everyday
menswear

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Ch 8 -17

Product-Positioning Map for the


Rental Car Market
High Convenience

Firm 1
Firm 2
High Customer
Loyalty

Low Customer
Loyalty

Firm 3
Low Convenience

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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
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Ch 8 -19

Finance/Accounting Issues
Acquiring needed capital
Developing projected financial
statements
Preparing financial budgets
Evaluating the worth of a business

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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
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Ch 8 -21

Finance/Accounting Issues
Debt vs. Equity Decisions

EPS/EBIT analysis

Earnings per share/earnings before interest


and taxes

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Ch 8 -22

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Ch 8 -23

Finance/Accounting Issues
Projected Financial Statement Analysis

Allows an organization to examine the


expected results of various actions and
approaches

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Ch 8 -24

Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements
1.

2.

3.

Prepare income statement before balance


sheet (forecast sales)
Use percentage of sales method to project
CGS & expenses
Calculate projected net income
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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
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Ch 8 -26

Projected Income Statement

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Ch 8 -27

Projected Balance Sheet

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Ch 8 -28

Finance/Accounting Issues
Financial Budget
Details how funds will be obtained
and spent for a specified period of
time

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Ch 8 -29

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

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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

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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


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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

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Ch 8 -33

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Ch 8 -34

Research & Development Issues

New products and improvement of


existing products that allow for effective
strategy implementation

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Ch 8 -35

Research & Development Issues


Constraints

Level of support constrained by resource


availability

Technological improvements shorten


product life cycles
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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
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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.

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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

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Ch 8 -39

All rights reserved. No part of this publication may be reproduced, stored in a


retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.

Copyright 2011 Pearson

Ch 8 -40

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