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

1. Chapter 8Implementing 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 Fred R. David Prentice Hall

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! Fred R. David Prentice Hall

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 Fred R. David Prentice Hall

4. Product Place Promotion Price Quality Distribution channels Advertising Level Features Distribution coverage Personal selling Discounts & allowances Style Outlet location Sales promotion Payment terms Brand name Sales territories Publicity Packaging Inventory levels/locations Product line Transportation carriers Warranty Service level Marketing Mix – Component Factors Fred R. David Prentice Hall

5. Bases for Segmenting Markets -- Geographic Demographic Psychographic Behavioral Geographic Basis: Region County Size City or SMSA size Density Climate Market Segmentation Demographic Basis: • Age • Family Size • Family Life Cycle • Income Occupation • Education • Religion • Race Nationality Behavioral Basis: • Use occasion • Benefits sought • User status • Usage rate • Loyalty status • Readiness Stage • Attitude toward product Psychographic Basis: • Social Class • Lifestyle • Personality Fred R. David Prentice Hall

6. Product Positioning Steps 1. Select Key Criteria 2. Diagram Map Product Positioning Steps • Plot competitors’ products 4. Look for niches 5. Develop Marketing Plan Fred R. David Prentice Hall

7. Product Positioning Map High Convenience Rental Car Market Firm 1 • • Firm 2 High Customer Loyalty Low Customer Loyalty Product Positioning based on: • Customers’ wants • Customers’ needs Strategy-Implementation Tool— • Look for vacant niche • Avoid suboptimization • Don’t serve 2 segments with same strategy • Don’t position in the middle of the map • Firm 3 Low Convenience Fred R. David Prentice Hall

8. PP Map for Business Degrees High Leadership Training Schools: SMC, CSUM, CSUEB, SJSU Little Individual Attention A lot of Individual Attention Low Leadership Training Fred R. David Prentice Hall

9. Evaluating Worth of a Business Central to strategy implementation as integrative, intensive and diversification strategies are often implement through acquisitions of other firms. Fred R. David Prentice Hall

10. Evaluating Worth of a Business 3 Basic approaches: • What a firm owns • What a firm earns • What a firm will bring in the market Fred R. David Prentice Hall

11. Valuation: • What a firm owns • What a firm earns • What a firm will bring in the market • http://finance.yahoo.com/ Fred R. David Prentice Hall

12. Research & Development Issues 3 Major R&D approaches to implementing strategies – • First firm to market new technological products • Be an innovative imitator of successful products • Low-cost producer of similar but less expensive products Fred R. David Prentice Hall

13. Finance/Accounting Issues Debt vs. Equity Decisions – • EPS/EBIT analysis • Earnings per share/Earnings before interest and taxes Fred R. David Prentice Hall

14. Pro-Forma 6 Steps in Pro Forma Financial Analysis • Prepare income statement before balance sheet (forecast sales) • Use percentage-of-sales method to project CGS and expenses • Calculate projected net income • 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 statements Fred R. David Prentice Hall