IMPLEMENTING STRATEGIES: MARKETING,
FINANCE/ACCOUNTING, R&D, AND MIS ISSUES
Christa Auliffe Tubio Melanie Pinili
The Nature of Strategy Implementation
The greatest strategy is doomed if its implemented badly
-Bernard Reimann
Strategy implementation means change Less than 10% of strategies formulated are successfully implemented
The Nature of Strategy Implementation
Some of the reasons for the low success rate in 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
Marketing Issues
Countless marketing variables affect the success or failure of Strategy Implementation (SI).
Two variables that are of central importance to Strategy Implementation:
Market Segmentation Product Positioning
Marketing Issues
Market segmentation
Subdividing of a market into distinct subsets of customers according to needs and buying habits.
A B C D E F
Marketing Issues
Geographic Region Country Size Age Gender Family size Nationality Density climate
Market Segment Basis
Demographi
Income Occupation Education
Family life cycle Religion race
c
Social class Personality
Psychograp hic
Behavioral
Use occasion Benefits sought User status
Usage rate Attitude toward product
Readiness stage Loyalty status
Marketing Issues
Market Segmentation is an important variable in strategy implementation for three major reasons:
It is required to successfully implement market development, product development, market penetration, and diversification strategies. It allows a firm to operate with limited resources because mass production, distribution, and advertising are not required. It enables small firms to compete successfully with large firms by maximizing per-unit profits and persegment sales
Marketing Issues
Market Segmentation directly affects the marketing mix variables: Product, Price, Promotion, Place
Marketing Mix component variables
PRODUCT PLACE PROMOTION PRICE
Quality Features and options Style Brand Name Packaging Product line Warranty Service level Other services
Distribution channels Distribution coverage Outlet location Sales territories Inventory levels and locations Transportatio n carriers
Advertising Personal selling Sales promotion publicity
Level Discounts and allowances Payment terms
Marketing Issues
Product Positioning Schematic representations that reflect how products/services compare to competitors on dimensions most important to success in industry
Marketing Issues
Product Positioning steps: 1. 2. 3. 4. 5. Select key criteria Diagram map Plot competitors products Look for niches Develop marketing plan
A product positioning map for menswear retail stores
Very latest, fashionable menswear Average specialty chain
Low Price Average mass merchandiser or discounter
High Price Average department store
Conservative, everyday menswear
Finance/Accounting issues
Central to strategy implementation
Concepts essential to strategy implementation Acquiring needed capital Developing projected financial statements Preparing financial budgets Evaluating a worth of a business
Finance/Accounting issues
Acquiring Needed Capital
Debt Equity
Finance/Accounting issues
Debt vs. Equity decisions
1.
EPS/EBIT analysis
An
Earnings Per Share/Earnings Before Interest and Taxes analysis is the most widely used method for determining whether debt, stock, or a combination of debt and stock is the best alternative for raising capital to implement strategies. This method involves an examination of the impact that debt versus stock financing has on earnings per share under various assumptions as to EBIT.
Finance/Accounting issues
Projected Annual Financial Statements
Allows an organization to examine the expected results of various actions and approaches.
Finance/Accounting issues
Steps in Preparing Projected Financial Statements
1.
2.
3. 4.
5.
6.
Prepare income statement before balance sheet (forecast sales) Use percentage of sales method to project CGS & expenses Calculate projected net income 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
Projected Income Statement
Projected Balance Sheet
Finance/Accounting issues Financial budgets
It is a document that details how funds will be obtained and spent for a specified period of time.
Finance/Accounting issues
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
Finance/Accounting issues
Evaluating a worth of a business
Central to strategy implementation integrative, intensive and diversification strategies often implemented through acquisitions of firms
Three basic approaches 1. What a firm owns 2. What a firm earns 3. What a firm will bring in a market
Research & Development issues
Development of new products and improving old products to allow effective strategy implementation
Constraints
Level of support constrained by source of availability Technological improvements shorten product life cycle
Research & Development issues
Three major R&D approaches to implementing strategies:
1.
2.
3.
Be the first firm to market new technological products. Be an innovative imitator of successful products. Be a low-cost producer by mass-producing products similar to but less expensive than products recently introduced.
Management Information System issues
Information is the basis for understanding in a firm. Its one of the most important factors in differentiating successful and unsuccessful firms.
Functions of MIS:
Information collection, retrieval, and storage Keeping managers informed Coordination of activities among divisions Allow firm to reduce costs
