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

Marketing Issues Centrally important to Implementation Market segmentation Product positioning Copyright 2007 Prentice Hall

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 Copyright 2007 Prentice Hall

Marketing Issues Market Segment Basis Geographic Demographic Psychographic Behavioral Copyright 2007 Prentice Hall

Marketing Issues Product Positioning Customer Wants Customer Needs Copyright 2007 Prentice Hall

Product Positioning Steps 1. Select Key Criteria 2. Diagram Map Product Positioning Steps Plot competitors’ products 4. Look for niches 5. Develop Marketing Plan Copyright 2007 Prentice Hall

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 Copyright 2007 Prentice Hall

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

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

Finance/Accounting Issues Steps in Preparing Projected Financial Statements Prepare income statement before balance sheet (forecast sales) Use percentage of sales method to project CoGS & expenses Calculate projected net income Copyright 2007 Prentice Hall

Finance/Accounting Issues Steps in Preparing Projected Financial Statements (cont’d) Subtract dividends to be paid from Net Income and add remaining to Retained Earnings Project balance sheet times beginning with retained earnings List comments (remarks) on projected statements Copyright 2007 Prentice Hall

Projected Income Statement for Litten Company (in millions)   Prior Year 2005 Projected Year 2006 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 Copyright 2007 Prentice Hall

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

Finance/Accounting Issues Types of Budgets Cash budgets Operating budgets Sales budgets Profit budgets Factory Budgets Expense Budgets Copyright 2007 Prentice Hall

Finance/Accounting Issues Types of Budgets Divisional budgets Variable budgets Flexible budgets Fixed budgets Copyright 2007 Prentice Hall

Finance/Accounting Issues Evaluating Worth of a Business: Three Basic Approaches What a firm owns What a firm earns What a firm will bring in the market Copyright 2007 Prentice Hall

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

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