Presentation on theme: "Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, & MIS Issues Successful strategy implementation depends on cooperation among all."— Presentation transcript:
1 Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, & MIS Issues
Successful strategy implementation depends on cooperation among all functional & divisional managers in an Organization Marketing dept are commonly charged with implementing strategies that require significant increases in sales rev in new areas and with new or improved products Finance / accounting managers devise effective SI approaches at low cost & minimum risk to that firm R&D transfer complex technologies or develop new tech to successfully implement Strategies MIS provide leadership and training for all individuals
2 Less than 10% of strategies formulated are successfully implemented!
This chapter examines marketing, finance/accounting, R&D, and management information systems(MIS) Less than 10% of strategies formulated are successfully implemented! Paying too much for a new acquisition Falling behind competitors in R&D
3 Comprehensive strategic management model
Perform External Audit Chapter 3 Develop Vision & Mission Chapter 2 Establish Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies Chapter 6 Implement Strategies: Mgmt Issues Chapter 7 Implement Strategies: Marketing, Fin/Acct, R&D, CIS Chapter 8 Measure & Evaluate Performance Chapter 9 Perform Internal Audit Chapter 4
4 Placing banners on related websites
Sub dividing of a market into distinct subsets of customers according to needs & buying habits Marketing Issues Centrally important to Implementation Market segmentation Strategies such as Market development, product development, market penetration & diversification require increased sales through new markets & products MS allows a firm to operate with limited resources because mass production, mass distribution and mass advertising are not required SM decisions affect Marketing mix Does the internet Make Market Segmentation Easier ? Placing banners on related websites
5 Marketing Issues Market Segment Basis Geographic Demographic
Psychographic Behavioral
6 Marketing Mix – Component Factors
Service level Warranty Transportation carriers Product line Inventory levels/locations Packaging Publicity Sales territories Brand name Payment terms Sales promotion Outlet location Style Discounts & allowances Personal selling Distribution coverage Features Level Advertising Distribution channels Quality Price Promotion Place Product
7 Under promise and then overdeliver is the Key!
After markets have been segmented , next step is to find out what customers want and expect Marketing Issues Centrally important to Implementation Product Positioning A severe mistake is to assume the firm knows what customers want and expect Steps required in Product planning Effective product-positioning meets two criteria It uniquely distinguishes a company from the competition It leads customers to expect slightly less service than a company can deliever ANALYSIS & RESEARCH Book Under promise and then overdeliver is the Key!
8 Marketing Issues Customer Wants Product Positioning Customer Needs
9 Product Positioning Steps
1. Select Key Criteria 2. Diagram Map Product Positioning Steps Plot competitors’ products 4. Look for niches 5. Develop Marketing Plan
10 Product Positioning Map
High Convenience High Convenience Rental Car Market Rental Car Market Firm 1 • Firm 1 • • Firm 2 • Firm 2 High Customer Loyalty Low Customer Loyalty Low Customer Loyalty • Firm 3 • Firm 3 Low Convenience
11 Finance /Accounting Issues
Acquiring needed capital Developing projected financial statements Preparing financial budgets To lease or buy fixed assets To extend the time of accounts receivable To determine the amount of cash that should be kept on hand
12 EPS-EBIT Analysis (in $millions)
Heinz Company – Year End 2001 $Amount Needed: $500 Stock Price $40 EBIT Range $1000 to $2000 Tax Rate 175/673 = .26 = 26% Interest Rate 5% # Shares Outstanding 350
13 EPS-EBIT Analysis (in $millions) – Heinz Company
Stock Financing Debt Financing Combination Financing High Low EBIT ($982.4 in 2001) $2000 $1000 Interest (5%) 25 10 EBT 2000 1000 1975 975 1990 990 Taxes 26% 520 260 514 254 517 257 EAT 1480 740 1461 721 1473 733 # Shares outstanding 362.5 350 357.5 EPS 4.08 2.04 4.17 2.06 4.12 2.05
14 Finance/Accounting Issues
EPS-EBIT Analysis Heinz Conclusion: Heinz should use debt to raise the $500 million
15 Finance/Accounting Issues
Projected Financial Statements Allow an organization to examine the expected results of various actions and approaches This type of analysis can be used to forecast the impact of various implementation decisions ( for example, to increase promotional expenditures by 50% to support a market development strategy & to increase salaries by 25% to support a market penetration strategy, to increase R&D expenditures by 70% to support product development, or to tell sell $1 Million of common stock to raise capital for diversification
16 Projected Income Statement for Litten Company (in millions)
Prior Year 2004 Projected Year 2005 Remarks Projected Income Statement Sales 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 Administrative Expense 5 7.50 5% of sales EBIT 15 22.50 Interest 3 3.00 EBT 12 19.50 Taxes 6 9.75 50% rate Net Income Dividends 2 5.00 Retained Earnings 4 4.75
17 Finance/Accounting Issues
Financial Budget -- Details how funds will be obtained and spent for a specified period of time.
18 3 Major R&D approaches to implementing strategies
Research & Development Issues Developing new products & improving old products in a way that will allow effective strategy implementation 3 Major R&D approaches to implementing strategies Product development, Market Penetration & related diversification require new products to be successfully developed and that old products be significantly improved But the level of management support for R&D is often constrained by resources availability Well formulated R&D policies match market opportunities with internal capablilities
19 MIS Issues Functions of MIS
Firms that implement strategies using the best information will reap competitive advantages in the 21st Century MIS Issues Functions of MIS Information collection, retrieval, & storage Keeping managers informed Coordination of activities among divisions Allow firm to reduce costs
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