Strategic Management david_sm13_ppt_08.ppt

Copyright © 2011 Pearson Education, Inc.
Publishing as Prentice Hall
Ch 8 -1
Chapter 8
Implementing Strategies: Marketing,
Finance/Accounting, R&D, and MIS Issues
Strategic Management:
Concepts & Cases
13th
Edition
Fred David

Ch 8 -2

Ch 8 -3
“The greatest strategy is doomed
if it’s implemented badly.”
– Bernard Reimann
Implementing Strategies

Ch 8 -4
Less than 10% of strategies formulated
are successfully implemented!
The Nature of Strategy
Implementation

Ch 8 -5
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

Ch 8 -6
Countless marketing variables affect the success or failure of Strategy
Implementation (SI). Two variables are of central importance to SI:
 Market segmentation
 Product positioning
Marketing Issues

Ch 8 -7
 Subdividing of a market into
distinct subsets of customers
according to needs and buying
habits
Marketing Issues
Market Segmentation

Ch 8 -8
Market Segmentation
Market Segment
Basis Psychographic
Behavioral
Geographic
Demographic

Ch 8 -9
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.
Market Segmentation

Ch 8 -10
Market Segmentation decisions directly
affect marketing mix variables, as
indicated in Table 8-3:
 Product
 Place
 Promotion
 Price
Marketing Mix Variables

Ch 8 -11
Table 8-3

Ch 8 -12
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.

Ch 8 -13
Product Positioning Steps
1. Select key criteria
2. Diagram map
3. Plot competitors’ products
4. Look for niches
5. Develop marketing plan

Ch 8 -14
Product-Positioning Map for
Menswear Retail Stores
Very latest, fashionable
menswear
Conservative, everyday
menswear
Low Price High Price
Average
department store
Average specialty
chain
Average mass
merchandiser or
discounter

Ch 8 -15
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

Ch 8 -16
Acquiring Needed Capital:
 Equity – common stock
 Debt - bonds
 Debt - borrow from lenders

Ch 8 -17
 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.

Ch 8 -18
 Allows an organization to examine the
expected results of various actions and
approaches
Projected Financial Statement Analysis

Ch 8 -19
1. Prepare income statement before
balance sheet (forecast sales)
2. Use percentage of sales method to
project CGS & expenses
3. Calculate projected net income
Steps in Preparing Projected Financial
Statements

Ch 8 -20
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
Steps in Preparing Projected Financial
Statements (cont’d)

Ch 8 -21
Projected Income Statement

Ch 8 -22
Projected Balance Sheet

Ch 8 -23
Details how funds will be obtained
and spent for a specified period of
time
Financial Budget

Ch 8 -24
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

Ch 8 -25
 Central to strategy implementation –
integrative, intensive, and
diversification strategies often
implemented through acquisitions of
other firms
Evaluating the Worth of a Business

Ch 8 -26
1. What a firm owns
2. What a firm earns
3. What a firm will bring in the market
Evaluating the Worth of a Business
There are three basic approaches

Ch 8 -27
Research & Development Issues
New products and improvement of
existing products that allow for effective
strategy implementation

Ch 8 -28
 Level of support constrained by resource
availability
 Technological improvements shorten
product life cycles
Constraints

Ch 8 -29
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.
There are three major R&D approaches
to implementing strategies:

Ch 8 -30
Management Information
Systems (MIS) Issues
Having an effective management
information system (MIS) may be the
most important factor in differentiating
successful from unsuccessful firms.

Ch 8 -31
 Information collection, retrieval, and
storage
 Keeping managers informed
 Coordination of activities among divisions
 Allows firm to reduce costs
MIS Issues
Functions of MIS

Strategic Management david_sm13_ppt_08.ppt

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