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