Module 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues

1. Module 8Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues

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

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

5. 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

7. Current Marketing Issues • Advertising media • Purpose-based marketing

8. Marketing Issues • Market segmentation • Product positioning

9. Marketing Issues • Subdividing of a market into distinct subsets of customers according to needs and buying habits Market Segmentation

10. Market Segmentation Geographic Demographic Market SegmentBasis Psychographic Behavioral

11. Market Segmentation • Market-development, product-development, 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

12. Marketing Mix Variables • Product • Place • Promotion • Price

13. Marketing Issues Product Positioning Schematic representations that reflect how products/services compare to competitors’ on dimensions most important to success in the industry

14. Product Positioning Steps • Select key criteria • Diagram map • Plot competitors’ products • Look for niches • Develop marketing plan

15. Product-Positioning Map for Banks Personal Bank B Bank A Bank C Aggressive Conservative Bank D Bank E Impersonal

16. Product-Positioning Map for Personal Computers High Capability Firm 1 Firm 2 Good Customer Service Bad Customer Service Firm 4 Firm 3 Low Capability

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

18. Product-Positioning Map for the Rental Car Market High Convenience Firm 1 Firm 2 High Customer Loyalty Low Customer Loyalty Firm 3 Low Convenience

19. Product Positioning • Look for a vacant niche • Don’t serve two segments with the same strategy • Don’t position yourself in the middle of the map

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

21. 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

22. Finance/Accounting Issues Debt vs. Equity Decisions • EPS/EBIT analysis • Earnings per share/earnings before interest and taxes

24. Finance/Accounting Issues Projected Financial Statement Analysis • Allows an organization to examine the expected results of various actions and approaches

25. Finance/Accounting Issues Steps in Preparing Projected Financial Statements • Prepare income statement before balance sheet (forecast sales) • Use percentage of sales method to project CGS & expenses • Calculate projected net income

26. Finance/Accounting Issues Steps in Preparing Projected Financial Statements (cont’d) • Subtract dividends to be paid from net income and add remaining to retained earnings • Project balance sheet items beginning with retained earnings • List comments (remarks) on projected statements

27. Projected Income Statement

28. Projected Balance Sheet

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

30. Cash budgets Operating budgets Sales budgets Profit budgets Factory budgets Capital budgets Expense budgets Divisional budgets Variable budgets Flexible budgets Fixed budgets Types of Budgets

31. Finance/Accounting Issues Evaluating Worth of a Business • Central to strategy implementation – integrative, intensive, and diversification strategies often implemented through acquisitions of other firms

32. Evaluating Worth of a Business Three Basic Approaches • What a firm owns • What a firm earns • What a firm will bring in the market

33. Evaluating Worth of a Business • Net worth or stockholder’s equity • Net profit – conservative value would be five times the firm’s current annual profits • Price-earnings ratio method • Outstanding shares method

35. Research & Development Issues New products and improvement of existing products that allow for effective strategy implementation

36. Research & Development Issues • Level of support constrained by resource availability • Technological improvements shorten product life cycles Constraints

37. Research & Development Issues Three Major R&D Approaches to Implementing Strategies • First firm to market new technological products • Innovative imitator of successful products • Low-cost producer of similar but less expensive products

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

39. MIS Issues • Information collection, retrieval, and storage • Keeping managers informed • Coordination of activities among divisions • Allows firm to reduce costs Functions of MIS