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implementing strategies
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Copyright 2007 Prentice HallCh 8-*Chapter 8Implementing Strategies: Marketing, Finance/Accounting, R&D, & MIS Issues
Strategic Management: Concepts & Cases11th EditionFred David
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Chapter OutlineThe Nature of Strategy ImplementationMarketing IssuesFinance/Accounting Issues
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Chapter Outline (contd)Research & Development (R&D) IssuesManagement Information Systems (MIS) Issues
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-* The greatest strategy is doomed if its implemented badly. --Bernard ReimannImplementing Strategies
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-* -- Strategy implementation means changeThe Nature of Strategy Implementation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-* -- Less than 10% of strategies formulated are successfully implemented!The Nature of Strategy Implementation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Failing to segment markets appropriatelyPaying too much for a new acquisitionFalling behind competition in R&DNot recognizing benefit of computers in managing informationThe Nature of Strategy Implementation
Low Success Rate Strategy Implementation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Market goods & services wellRaise needed working capitalProduce technologically sound goodsSound information systemsThe Nature of Strategy ImplementationSuccessful Strategy Implementation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Marketing Issues -- Marketing variables affect success/failure of strategy implementation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Exclusive dealerships multiple channels of distributionHeavy, light, or no TV advertisingPrice leader or price followerAdvertise online or notOffer complete or limited warrantyMarketing IssuesMarketing decisions requiring policies
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Market segmentation
Product positioning
Marketing IssuesCentrally important to Implementation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Subdividing of a market into distinct subsets of customers according to needs and buying habitsMarketing IssuesMarket Segmentation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Key to matching supply & demandMarket development, product-development, market penetration & diversification strategiesAllows operating with limited resourcesEnables small firms to compete successfullyMarketing IssuesMarket Segmentation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Directly affect marketing mix variables:ProductPlacePromotionPriceMarketing IssuesMarket Segmentation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Marketing Mix Component Factors
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Marketing IssuesMarket Segment BasisPsychographicBehavioralGeographicDemographic
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*RegionCounty sizeCity or SMSA sizeDensityClimateMarketing IssuesGeographic
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Marketing IssuesMarket Segment BasisPsychographicBehavioralGeographicDemographic
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*AgeFamily SizeFamily Life CycleIncome/OccupationEducationReligionRace/NationalityMarketing IssuesDemographic
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Marketing IssuesMarket Segment BasisPsychographicBehavioralGeographicDemographic
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Social ClassLifestylePersonalityMarketing IssuesPsychographic
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Marketing IssuesMarket Segment BasisPsychographicBehavioralGeographicDemographic
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Use occasionBenefits soughtUser statusUsage rateLoyalty statusReadiness stageAttitude toward productMarketing IssuesBehavioral
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Marketing Issues -- Schematic representations that reflect how products/services compare to competitors on dimensions most important to success in the industryProduct Positioning
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Marketing IssuesProduct PositioningCustomer WantsCustomer Needs
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Product Positioning StepsProductPositioning Steps2. Diagram Map1. Select Key CriteriaPlot competitorsproducts4. Look for niches5. Develop Marketing Plan
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Product Positioning MapLowConvenienceHighCustomerLoyaltyLowCustomerLoyalty
HighConvenienceFirm 1Firm 2
Firm 3Rental Car MarketLowCustomerLoyalty
HighConvenienceFirm 1Firm 2
Firm 3Rental Car Market
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Look for vacant nicheAvoid sub optimizationDos serve 2 segments w/ same strategyDonts position in the middle of the mapMarketing IssuesProduct Positioning as Strategy Implementation Tool
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Finance/Accounting Issues -- Central to strategy implementation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Acquiring needed capitalDeveloping projected financial statementsPreparing financial budgetsEvaluating worth of a businessFinance/Accounting IssuesEssential for implementation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Raise capital short-term, long-term, preferred, or common stockLease or buy fixed assetsDetermine appropriate dividend payout ratio
Finance/Accounting IssuesDecisions based on Finance/Accounting
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*LIFO, FIFO, or market-value accounting approachExtend time of AREstablish % discount on accounts for termsDetermine the amount of cash kept on handFinance/Accounting IssuesDecisions based on Finance/Accounting
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Debt
EquityFinance/Accounting IssuesCapital acquisition to implement strategies
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*EPS/EBIT analysisEarnings per share/Earnings before interest and taxesFinance/Accounting IssuesDebt vs. Equity Decisions
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Allow an organization to examine the expected results of various actions and approachesFinance/Accounting IssuesProjected Financial Statements
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Prepare income statement before balance sheet (forecast sales)
Use percentage of sales method to project CoGS & expenses
Calculate projected net incomeFinance/Accounting IssuesSteps in Preparing Projected Financial Statements
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*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 statementsFinance/Accounting IssuesSteps in Preparing Projected Financial Statements (contd)
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Projected Income Statement for Litten Company (in millions)
Prior Year 2005Projected Year 2006RemarksProjected Income StatementSales100150.0050% increase Cost of Goods Sold70105.0070% of salesGross Margin3045.00 Selling Expense1015.0010% of sales Administrative Expense57.505% of salesEBIT1522.50 Interest33.00EBT1219.50 Taxes69.7550% rateNet Income69.75 Dividends25.00Retained Earnings44.75
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*-- Details how funds will be obtained and spent for a specified period of time.Finance/Accounting IssuesFinancial Budget
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Cash budgetsOperating budgetsSales budgetsProfit budgetsFactory BudgetsExpense BudgetsFinance/Accounting IssuesTypes of Budgets
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Divisional budgetsVariable budgetsFlexible budgetsFixed budgetsFinance/Accounting IssuesTypes of Budgets
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Central to strategy implementation integrative, intensive, & diversification strategies often implemented through acquisitions of other firmsFinance/Accounting IssuesEvaluating Worth of a Business
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*What a firm ownsWhat a firm earnsWhat a firm will bring in the marketFinance/Accounting IssuesEvaluating Worth of a Business:3 Basic Approaches
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Worth of a Business AnalysisSouthwest AirlinesStockholders Equity:$ 5,524Net Income: 313Stock Price: 15.70EPS: .45Shares Outstanding 784Company Worth AnalysisStockholders Equity $ 5,524Net Income x 5 1,565Share Price/EPS x NI 10,920# Shares x Share Price 12,309
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Research & Development Issues -- New products and improvement of existing products that allow for effective strategy implementation
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Level of support constrained by resource availabilityTechnological improvements shorten product life cyclesResearch & Development IssuesConstraints
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*1st firm to market new technological productsInnovative imitator of successful productsLow-cost producer of similar but less expensive productsResearch & Development Issues3 Major R&D approaches to implementing strategies
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Management Information Systems (MIS) Issues -- Information is the basis for understanding the firm. One of the most important factors differentiating successful from unsuccessful firms
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-*Information collection, retrieval, & storageKeeping managers informedCoordination of activities among divisionsAllow firm to reduce costsMIS IssuesFunctions of MIS
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-* Key Terms & ConceptsFor Review (Chapter 8)Cash BudgetMarketing Mix VariablesEPS/EBIT AnalysisOutstanding Shares MethodManagement Information Systems (MIS)Price-Earnings Ratio MethodMarket SegmentationProduct Positioning
Copyright 2007 Prentice Hall
Copyright 2007 Prentice HallCh 8-* Key Terms & ConceptsFor Review (Chapter 8)Projected Financial Statement AnalysisResearch & Development (R&D)Vacant Niche
Copyright 2007 Prentice Hall
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