Ch 9 1 Copyright 2011 Pearson Education Strategic

Ch 9 -1 Copyright © 2011 Pearson Education

Strategic Management: Concepts and Cases Arab World Edition Fred R. David Abbas J. Ali Abdulrahman Y. Al-Aali Chapter 9: Implementing Strategies: Marketing, Finance / Accounting, R&D, and MIS Issues Ch 9 -2 Copyright © 2011 Pearson Education

Chapter Outline • The Nature of Strategy Implementation • Marketing Issues • Finance/Accounting Issues • Research & Development (R&D) Issues • Management Information Systems (MIS) Issues Ch 9 -3 Copyright © 2011 Pearson Education

Implementing Strategies “The greatest strategy is doomed if it’s implemented badly. ” – Bernard Reimann “Without planning and integrated studies for our investment projects, we certainly lose our competitive edge. ” – Abdul Rahman Bin Ali Al Jeraisy Chairman, Al Jeraisy Group Ch 9 -4 Copyright © 2011 Pearson Education

Source: Adapted from Fred R. David, “How Companies Define Their Mission, ” Long Range Planning 22, no. 3 (June 1988) 40. Ch 9 -5 Copyright © 2011 Pearson Education

The Nature of Strategy Implementation • Strategy implementation means change • Less than 10% of strategies formulated are successfully implemented! Ch 9 -6 Copyright © 2011 Pearson Education

The Nature of Strategy Implementation Reasons for the low success rate of strategy implementation: • 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 Ch 9 -7 Copyright © 2011 Pearson Education

The Nature of Strategy Implementation Ways to successful Strategy Implementation: • Market goods & services well • Raise needed working capital • Produce technologically sound goods • Sound information systems Ch 9 -8 Copyright © 2011 Pearson Education

Marketing Issues Marketing variables affect success/failure of strategy implementation Ch 9 -9 Copyright © 2011 Pearson Education

Marketing Issues Marketing decisions requiring policies: • Whether to use exclusive dealerships – multiple channels of distribution • Whether to use heavy, light, or no TV advertising • Whether to reward sales people • Whether to be a price leader or price follower • Whether to advertise online or not Ch 9 -10 Copyright © 2011 Pearson Education

Marketing Issues Centrally important to implementation: • Market segmentation • Product positioning Ch 9 -11 Copyright © 2011 Pearson Education

Marketing Issues Market Segmentation Subdividing of a market into distinct subsets of customers according to needs and buying habits Ch 9 -12 Copyright © 2011 Pearson Education

Marketing Issues Market Segmentation (cont’d) Things that directly affect marketing mix variables: • • Ch 9 -13 Product Place Promotion Price Copyright © 2011 Pearson Education

Marketing Issues Geographic Demographic Market Segment Basis Psychographic Behavioral Ch 9 -14 Copyright © 2011 Pearson Education

Marketing Issues Product Positioning Schematic representations that reflect how products/services compare to competitors’ on dimensions most important to success in the industry Ch 9 -15 Copyright © 2011 Pearson Education

Product Positioning Steps 1. Select Key Criteria 2. Diagram Map Product-Positioning Steps 3. Plot Competitors’ Products 4. Look for Niches 5. Develop Marketing Plan Ch 9 -16 Copyright © 2011 Pearson Education

Ch 9 -17 Copyright © 2011 Pearson Education

Marketing Issues Product Positioning as Strategy Implementation Tool • Look for vacant niche • Avoid sub optimization • Don’t serve 2 segments with same strategy • Don’t position in the middle of the map Ch 9 -18 Copyright © 2011 Pearson Education

Finance/Accounting Issues Central to strategy implementation Ch 9 -19 Copyright © 2011 Pearson Education

Finance/Accounting Issues Essential for Implementation • • Ch 9 -20 Acquiring needed capital Developing projected financial statements Preparing financial budgets Evaluating worth of a business Copyright © 2011 Pearson Education

Finance/Accounting Issues Decisions Based on Finance/Accounting • Raise capital – short-term, long-term, preferred, or common stock • Lease or buy fixed assets • Determine appropriate dividend payout ratio • Establish % discount on accounts for terms • Determine the amount of cash kept on hand Ch 9 -21 Copyright © 2011 Pearson Education

Finance/Accounting Issues Capital Acquisition to Implement Strategies • Debt • Equity Ch 9 -22 Copyright © 2011 Pearson Education

Finance/Accounting Issues Projected Financial Statements Allow an organization to examine the expected results of various actions and approaches Ch 9 -23 Copyright © 2011 Pearson Education

Finance/Accounting Issues Financial Budget Details how funds will be obtained and spent for a specified period of time Ch 9 -24 Copyright © 2011 Pearson Education

Finance/Accounting Issues Types of Budgets • • • Cash budgets Operating budgets Sales budgets Profit budgets Factory budgets Ch 9 -25 Copyright © 2011 Pearson Education • • • Expense budgets Divisional budgets Variable budgets Flexible budgets Fixed budgets

Finance/Accounting Issues Evaluating Worth of a Business Three Basic Approaches: 1. What a firm owns 2. What a firm earns 3. What a firm will bring in the market Ch 9 -26 Copyright © 2011 Pearson Education

Research & Development Issues New products and improvement of existing products that allow for effective strategy implementation. Ch 9 -27 Copyright © 2011 Pearson Education

Research & Development Issues Constraints • Level of support constrained by resource availability • Technological improvements shorten product life cycles Ch 9 -28 Copyright © 2011 Pearson Education

Research & Development Issues Three Major R&D Approaches to Implementing Strategies 1. 1 st firm to market new technological products 2. Innovative imitator of successful products 3. Low-cost producer of similar but less expensive products Ch 9 -29 Copyright © 2011 Pearson Education

Management Information Systems (MIS) Issues Information is the basis for understanding the firm. It’s one of the most important factors differentiating successful from unsuccessful firms. Ch 9 -30 Copyright © 2011 Pearson Education

MIS Issues Functions of MIS • Information collection, retrieval/ feedback , and storage • Keeping managers informed • Coordination of activities among divisions • Allow firm to reduce costs Ch 9 -31 Copyright © 2011 Pearson Education

• Ch 8 Copyright © 2009 Pearson Education, Inc. 32 Publishing as Prentice Hall The end