Chapter 8 Implementing Strategies Marketing FinanceAccounting RD MIS

Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, & MIS Issues Strategic Management: Concepts & Cases 11 th Edition Fred David Copyright 2007 Prentice Hall Ch 8 -1

Marketing Issues Centrally important to Implementation 1. Market segmentation 2. Product positioning Copyright 2007 Prentice Hall Ch 8 -2

Marketing Mix – Component Factors 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 Copyright 2007 Prentice Hall Ch 8 -3

Marketing Issues Geographic Demographic Market Segment Basis Psychographic Behavioral Copyright 2007 Prentice Hall Ch 8 -4

Marketing Issues Customer Wants Product Positioning Customer Needs Copyright 2007 Prentice Hall Ch 8 -5

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 Copyright 2007 Prentice Hall Ch 8 -6

Product Positioning Map High Convenience Rental Car Market • Firm 2 Firm 1 • High Customer Loyalty Low Customer Loyalty • Firm 3 Low Convenience Copyright 2007 Prentice Hall Ch 8 -7

Finance/Accounting Issues Essential for implementation n n Acquiring needed capital Developing projected financial statements Preparing financial budgets Evaluating worth of a business Copyright 2007 Prentice Hall Ch 8 -8

Finance/Accounting Issues Projected Financial Statements n Allow an organization to examine the expected results of various actions and approaches Copyright 2007 Prentice Hall Ch 8 -9

Finance/Accounting Issues Steps in Preparing Projected Financial Statements 1. Prepare income statement before balance sheet (forecast sales) 2. Use percentage of sales method to project Co. GS & expenses 3. Calculate projected net income Copyright 2007 Prentice Hall Ch 8 -10

Finance/Accounting Issues Steps in Preparing Projected Financial Statements (cont’d) 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 Copyright 2007 Prentice Hall Ch 8 -11

Projected Income Statement for Litten Company (in millions) Prior Year 2005 Projected Year 2006 Projected Income Statement Sales Remarks 100 150. 00 50% increase Cost of Goods Sold 70 105. 00 70% of sales Gross Margin 30 45. 00 Selling Expense 10 15. 00 10% of sales 5 7. 50 5% of sales 15 22. 50 3 3. 00 12 19. 50 Taxes 6 9. 75 50% rate Net Income 6 9. 75 Dividends 2 5. 00 Retained Earnings 4 4. 75 Administrative Expense EBIT Interest EBT Copyright 2007 Prentice Hall Ch 8 -12

Finance/Accounting Issues Financial Budget -- Details how funds will be obtained and spent for a specified period of time Copyright 2007 Prentice Hall Ch 8 -13

Finance/Accounting Issues Types of Budgets n n n Cash budgets Operating budgets Sales budgets Profit budgets Factory Budgets Expense Budgets Copyright 2007 Prentice Hall Ch 8 -14

Finance/Accounting Issues Types of Budgets n n Divisional budgets Variable budgets Flexible budgets Fixed budgets Copyright 2007 Prentice Hall Ch 8 -15

Finance/Accounting Issues Evaluating Worth of a Business: Three Basic Approaches 1. 2. 3. What a firm owns What a firm earns What a firm will bring in the market Copyright 2007 Prentice Hall Ch 8 -16

Research & Development Issues Three Major R&D approaches to implementing strategies 1. 2. 3. 1 st firm to market new technological products Innovative imitator of successful products Low-cost producer of similar but less expensive products Copyright 2007 Prentice Hall Ch 8 -17

MIS Issues Functions of MIS n n Information collection, retrieval, & storage Keeping managers informed Coordination of activities among divisions Allow firm to reduce costs Copyright 2007 Prentice Hall Ch 8 -18