Chapter08 1
- 1. Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues Strategic Management: Concepts and Cases. 9th edition Fred R. David PowerPoint Slides by Anthony F. Chelte Western New England College Ch 8-1 Fred R. David
- 2. Implementing Strategies There is no “perfect” strategic decision. One always has to pay a price. One always has to balance conflicting objectives, conflicting opinions, and conflicting priorities. The best strategic decision is only an approximation—and a risk -- Peter Drucker Less than 10% of strategies formulated are successfully implemented! Ch 8-4 Fred R. David
- 3. Implementing Strategies: Low strategy implementation success: – Failing to segment markets appropriately – Paying too much for a new acquisition – Falling behind competition in R&D – Not recognizing benefit of computers in managing information For Successful Strategy Implementation: – Firms must market goods and services well – Firms must raise needed working capital – Firms produce technologically-sound goods – Firms must have sound information systems Ch 8-7 Fred R. David
- 4. Marketing Mix – Component Factors Product Place Promotion Price Quality Distribution channels Advertising Level Distribution Discounts & Features Personal selling coverage allowances Style Outlet location Sales promotion Payment terms Brand name Sales territories Publicity Inventory Packaging levels/locations Transportation Product line carriers Warranty Service level Ch 8-17 Fred R. David
- 5. Market Segmentation Geographic Basis: Bases for Segmenting – Region Markets -- – – County Size City or SMSA size – Geographic – Density – Climate – Demographic Demographic Basis: – Psychographic • • Age Family Size – Behavioral • • Family Life Cycle Income Occupation • Education • Religion • Race Nationality Behavioral Basis: – Use occasion Psychographic Basis: – Benefits sought – User status – Social Class – Usage rate – Lifestyle – Loyalty status – Personality – Readiness Stage – Attitude toward product Ch 8-18 Fred R. David
- 6. Product Positioning Steps 1. Select Key Criteria 2. Diagram Map Product 3. Plot competitors’ Positioning products Steps 4. Look for niches 5. Develop Marketing Plan Ch 8-25 Fred R. David
- 7. Product Positioning Map High Convenience Rental Car Market • Firm 1 Firm 2 • High Low Customer Customer Loyalty Loyalty Strategy-Implementation Product Positioning based on: • Tool— Look for vacant niche • – Customers’ wants • Avoid suboptimization Firm 3 – Customers’ needs • Don’t serve 2 segments with same strategy Low • Don’t position in the middle of the map Convenience Ch 8-26 Fred R. David
- 8. PP Map for Business Degrees High Schools: Leadership SMC, CSUM, Training CSUEB, SJSU Little A lot of Individual Individual Attention Attention Low Leadership Training Ch 8-27 Fred R. David
- 9. Evaluating Worth of a Business Central to strategy implementation as integrative, intensive and diversification strategies are often implement through acquisitions of other firms. Ch 8-29 Fred R. David
- 10. Evaluating Worth of a Business 3 Basic approaches: 1. What a firm owns 2. What a firm earns 3. What a firm will bring in the market Ch 8-30 Fred R. David
- 11. WGO Equity method BS Equity Goodwill Valuation 2004 $201,875 $0 $201,875 2003 $210,626 $0 $210,626 2002 $179,815 $0 $179,815 Net Income method Net Inc 5 Valuation 2004 $70,641 $353,205 • Valuation: 2003 $49,884 $249,420 2002 $54,671 $273,355 • What a firm owns PE*Net Income 2004 Share Price $37.59 EPS $2.03 Valuation $1,308,076 • What a firm earns 2003 $33.88 $1.33 $1,270,729 • What a firm will 2002 $19.21 $1.34 $783,754 bring in the market Share Market Value Shares out Price Valuation 2004 34,214 $37.59 $1,286,104 • http://finance.yahoo.com/ 2003 36,974 $33.88 $1,252,679 2002 39,898 $19.21 $766,441 $32.92 Value Average 2004 $787,315 2003 $745,864 2002 $500,841 Ch 8-31 Fred R. David
- 12. Research & Development Issues 3 Major R&D approaches to implementing strategies – 1. First firm to market new technological products 2. Be an innovative imitator of successful products 3. Low-cost producer of similar but less expensive products Ch 8-34 Fred R. David
- 13. Finance/Accounting Issues Debt vs. Equity Decisions – • EPS/EBIT analysis – Earnings per share/Earnings before interest and taxes Ch 8-42 Fred R. David
- 14. Pro-Forma 6 Steps in Pro Forma Financial Analysis 1. Prepare income statement before balance sheet (forecast sales) 2. Use percentage-of-sales method to project CGS and expenses 3. Calculate projected net income 4. Subtract dividends to be paid from Net Income and add remaining to Retained Earnings 5. Project balance sheet times beginning with retained earnings 6. List comments (remarks) on projected statements Ch 8-44 Fred R. David