Strategic Management

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Ch 8 -1
Chapter 8
Implementing Strategies: Marketing,
Finance/Accounting, R&D, and MIS Issues
Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Ch 8 -2

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

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

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Ch 8 -5
 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
Marketing Issues
Marketing decisions requiring policies

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Ch 8 -6

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Ch 8 -7
Current Marketing Issues
 Advertising media
 Purpose-based marketing

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Ch 8 -8
 Market segmentation
 Product positioning
Marketing Issues

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Ch 8 -9
 Subdividing of a market into
distinct subsets of customers
according to needs and buying
habits
Marketing Issues
Market Segmentation

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Ch 8 -10
Market Segmentation
Market Segment
Basis Psychographic
Behavioral
Geographic
Demographic

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Ch 8 -11
 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
Market Segmentation

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Ch 8 -12
 Product
 Place
 Promotion
 Price
Marketing Mix Variables

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Ch 8 -13
Marketing Issues
Schematic representations that reflect
how products/services compare to
competitors’ on dimensions most
important to success in the industry
Product Positioning

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Ch 8 -14
Product Positioning Steps
1. Select key criteria
2. Diagram map
3. Plot competitors’ products
4. Look for niches
5. Develop marketing plan

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Ch 8 -15
Product-Positioning Map for Banks
Personal
Impersonal
Aggressive Conservative
Bank A
Bank B
Bank C
Bank D
Bank E

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Ch 8 -16
Product-Positioning Map for Personal
Computers High Capability
Low Capability
Good Customer
Service
Bad Customer
Service
Firm 1
Firm 2
Firm 3
Firm 4

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Ch 8 -17
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

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Ch 8 -18
Product-Positioning Map for the
Rental Car Market
High Convenience
Low Convenience
High Customer
Loyalty
Low Customer
Loyalty
Firm 1
Firm 2
Firm 3

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Ch 8 -19
 Look for a vacant niche
 Don’t serve two segments with
the same strategy
 Don’t position yourself in the
middle of the map
Product Positioning

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Ch 8 -20
Finance/Accounting Issues
 Acquiring needed capital
 Developing projected financial
statements
 Preparing financial budgets
 Evaluating the worth of a business

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 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
Finance/Accounting Issues

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

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Ch 8 -23

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

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Ch 8 -25
1. Prepare income statement before
balance sheet (forecast sales)
2. Use percentage of sales method to
project CGS & expenses
3. Calculate projected net income
Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements

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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
Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements (cont’d)

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Projected Income Statement

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Projected Balance Sheet

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

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Ch 8 -30
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

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Ch 8 -31
 Central to strategy implementation –
integrative, intensive, and
diversification strategies often
implemented through acquisitions of
other firms
Finance/Accounting Issues
Evaluating Worth of a Business

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Ch 8 -32
1. What a firm owns
2. What a firm earns
3. What a firm will bring in the market
Evaluating Worth of a Business
Three Basic Approaches

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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

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Ch 8 -34

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Ch 8 -35
Research & Development Issues
New products and improvement of
existing products that allow for effective
strategy implementation

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Ch 8 -36
 Level of support constrained by resource
availability
 Technological improvements shorten
product life cycles
Research & Development Issues
Constraints

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Ch 8 -37
1. First firm to market new technological
products
2. Innovative imitator of successful products
3. Low-cost producer of similar but less
expensive products
Research & Development Issues
Three Major R&D Approaches to
Implementing Strategies

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Ch 8 -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.

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

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Ch 8 -40
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