Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues Chapter 6

Stages of Strategic Management Strategy formulation Strategy implementation Strategy evaluation The strategic-management process consists of three stages: strategy formulation, strategy implementation, and strategy evaluation. Copyright ©2013 Pearson Education

Copyright ©2013 Pearson Education

Strategy Implementation Sum total of the activities and choices required for the execution of a strategic plan. Process by which strategies and policies are put into action through programs, budgets, and procedures.

Strategy Implementation Implementation Process Questions: Who are the people to carry out the strategic plan? What must be done to align operations with new direction? How is work going to be coordinated?

Strategy implementation requires a firm to establish annual objectives, create policies, motivate employees, and allocate resources so that formulated strategies can be implemented. often called the action stage Strategy implementation requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed and is often called the action stage Copyright ©2013 Pearson Education

Resources and Competencies Strategy implementation depends on resources and competencies possessed by the firm. These include: Money in certain amounts. Particular types of equipment. Specified numbers of people with … Certain skills, capabilities, and competencies Control and reporting systems.

Seven Actions of Implementing Strategy Allocate resources. Institute policies. Pursue best practices and continuous improvement. Information and operating systems. Rewards to strategy and goals. Shape corporate culture. Apply leadership.

Copyright ©2013 Pearson Education Annual Objectives Annual objectives short-term objectives that organizations must achieve to reach long-term objectives. should be measurable, quantitative, challenging, realistic, consistent, and prioritized. should be established at the corporate, divisional, and functional levels in a large organization. Annual objectives are short-term milestones that organizations must achieve to reach long-term objectives. They should be measurable, quantitative, challenging, realistic, consistent, and prioritized They should be established at the corporate, divisional, and functional levels in a large organization. Copyright ©2013 Pearson Education

Copyright ©2013 Pearson Education Annual Objectives Annual objectives benefits: Represent the basis for allocating resources. Main tool for evaluating managers. Major tool for monitoring progress toward achieving long-term objectives. Establish organizational, divisional, and departmental priorities. Copyright ©2013 Pearson Education

Copyright ©2013 Pearson Education Policies Policies the means by which annual objectives will be achieved. include guidelines, rules, and procedures established to support efforts to achieve stated objectives tool for strategy implementation. clarify what can and cannot be done in pursuit of an organization’s objectives. Policies are the means by which annual objectives will be achieved. They include guidelines, rules, and procedures established to support efforts to achieve stated objectives Policies are guides to decision making and address repetitive or recurring situations Copyright ©2013 Pearson Education

Copyright ©2013 Pearson Education Resource Allocation Resource allocation Central management activity that allows for strategy implementation. Strategic management enables resources to be allocated according to priorities established by annual objectives. Copyright ©2013 Pearson Education

Copyright ©2013 Pearson Education Types of Resources Financial Physical Human Technological Copyright ©2013 Pearson Education

Strategy Implementation Actions Overall strategy broken down into manageable parts. Goals and deadlines set for accomplishment. Appropriate resources allocated. Right numbers and types of people assigned. Policies and procedures to guide their actions. One person assigned overall responsibility for each part. Progress measured and tracked. Changes and adjustments when appropriate.

Current Marketing Issues How to make advertisements more interactive to be more effective. How to best take advantage of Facebook and Twitter conservations about the company and industry. How To use exclusive dealerships or multiple channels of distribution. How TV advertising versus online advertising. Copyright ©2013 Pearson Education

Current Marketing Issues How Firms should provide incentives to consumers to share their thoughts, opinions, and experiences on the company website. How The company website must not be all about the company—it must be all about the customer too. Copyright ©2013 Pearson Education

Copyright ©2013 Pearson Education Market Segmentation Market Segmentation Subdividing of a market into different divisions of customers according to needs and buying habits widely used in implementing strategies. Market segmentation decisions directly affect marketing mix factors: product, place, promotion, and price. Copyright ©2013 Pearson Education

Copyright ©2013 Pearson Education Market Segmentation Market segmentation permits a firm to operate with limited resources because mass production, mass distribution, and mass advertising are not required. Copyright ©2013 Pearson Education

Acquiring Capital to Implement Strategies Successful strategy implementation often requires additional capital. Two basic sources of capital for an organization are debt and equity. Copyright ©2013 Pearson Education

Copyright ©2013 Pearson Education Financial Budgets Financial budget : a document that details how funds will be obtained and spent for a specified period of time. include, operating budgets, sales budgets, profit budgets, capital budgets, expense budgets, divisional budgets. Copyright ©2013 Pearson Education

R&D Approaches for Implementing Strategies Be the first firm to market new technological products. Be an innovative successful products, thus minimizing the risks and costs of start-up. Be a low-cost producer by mass-producing products similar to but less expensive than products recently introduced. Copyright ©2013 Pearson Education

Management Information Systems (MIS) Issues Having an effective management information system (MIS) may be the most important factor in differentiating successful from unsuccessful firms. The process of strategic management is facilitated hugely in firms that have an effective information system. Copyright ©2013 Pearson Education

Examples of Organizational Systems Accounting and budgeting system Management information system Manufacturing control system Compensation and reward system Planning system

Potential Implementation Problems Original plan poorly considered. Take more time than planned. Poor coordination of activities. Assigned employees lacked necessary skills. Insufficient allocation of resources. Uncontrollable external environmental factors. Poorly defined key tasks and activities.