Transcript Chapter 1 The Nature of Strategic Management

Chapter 8
Implementing Strategies: Marketing,
Finance/Accounting, R&D, & MIS Issues
Ch 8-1
Marketing Issues
Centrally important to Implementation
1.
Market segmentation
2.
Product positioning
Ch 8-2
Marketing Mix – Component Factors
Product
Place
Promotion
Price
Quality
Distribution
channels
Advertising
Level
Features
Distribution
coverage
Personal selling
Discounts &
allowances
Style
Outlet location
Sales promotion
Payment terms
Brand name
Sales territories
Publicity
Packaging
Inventory
levels/locations
Product line
Transportation
carriers
Warranty
Service level
Ch 8-3
Marketing Issues
Geographic
Demographic
Market Segment
Basis
Psychographic
Behavioral
Ch 8-4
Marketing Issues
Customer Wants
Product
Positioning
Customer Needs
Ch 8-5
Product Positioning Steps
1. Select Key Criteria
2. Diagram Map
Product
Positioning
Steps
3. Plot competitors’
products
4. Look for niches
5. Develop Marketing
Plan
Ch 8-6
Product Positioning Map
High
Convenience
Rental Car Market
•
Firm 2
Firm 1
•
High
Customer
Loyalty
Low
Customer
Loyalty
•
Firm 3
Low
Convenience
Ch 8-7
EPS-EBIT Analysis
(in $millions)
Heinz Company – Year End 2001
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$Amount Needed: $500
Stock Price $40
EBIT Range $1000 to $2000
Tax Rate 175/673 = .26 = 26%
Interest Rate 5%
# Shares Outstanding 350
Ch 8-8
EPS-EBIT Analysis (in $millions) – Heinz
Company
Stock Financing
Financing
Financing
High
Low
High
Low
High
Low
$2000
$1000
$2000
$1000
$2000
$1000
0
0
25
25
10
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
362.5
350
350
357.5
357.5
EPS
4.08
2.04
4.17
2.06
4.12
2.05
EBIT ($982.4 in 2001)
Interest (5%)
Ch 8-9
Finance/Accounting Issues
EPS-EBIT Analysis Heinz
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Conclusion:
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Heinz should use debt to raise the $500 million
Ch 8-10
Finance/Accounting Issues
Projected Financial Statements
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Allow an organization to examine the expected
results of various actions and approaches
Ch 8-11
Projected Income Statement for Litten Company (in millions)
Prior Year 2004
Projected Year
2005
Remarks
Projected Income Statement
Sales
100
150.00
50% increase
70
105.00
70% of sales
30
45.00
10
15.00
10% of sales
5
7.50
5% of sales
15
22.50
3
3.00
12
19.50
Taxes
6
9.75
Net Income
6
9.75
2
5.00
4
4.75
Cost of Goods Sold
Gross Margin
Selling Expense
Administrative Expense
EBIT
Interest
EBT
Dividends
Retained Earnings
50% rate
Ch 8-12
Finance/Accounting Issues
Financial Budget
-- Details how funds will be obtained and spent for
a specified period of time.
Ch 8-13
Finance/Accounting Issues
Types of Budgets
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Cash budgets
Operating budgets
Sales budgets
Profit budgets
Factory Budgets
Expense Budgets
Ch 8-14
Finance/Accounting Issues
Types of Budgets
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Divisional budgets
Variable budgets
Flexible budgets
Fixed budgets
Ch 8-15
Finance/Accounting Issues
Evaluating Worth of a Business:
3 Basic Approaches
1.
2.
3.
What a firm owns
What a firm earns
What a firm will bring in the market
Ch 8-16
Research & Development
Issues
3 Major R&D approaches to implementing
strategies
1.
2.
3.
1st firm to market new technological products
Innovative imitator of successful products
Low-cost producer of similar but less
expensive products
Ch 8-17
MIS Issues
Functions of MIS
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Information collection, retrieval, & storage
Keeping managers informed
Coordination of activities among divisions
Allow firm to reduce costs
Ch 8-18