Transcript Strategic Management Concepts & Cases Eighth Edition Fred

Chapter 8
Implementing Strategies:
Marketing, Finance/Accounting,
R&D, and MIS Issues
Strategic Management:
Concepts and Cases. 9th edition
Fred R. David
PowerPoint Slides by
Anthony F. Chelte
Western New England College
Fred R. David
Prentice Hall
Ch 8-1
Implementing Strategies
There is no “perfect” strategic decision. One always
has to pay a price. One always has to balance
conflicting objectives, conflicting opinions, and
conflicting priorities. The best strategic decision is
only an approximation—and a risk
-- Peter Drucker
Less than 10% of strategies formulated
are successfully implemented!
Fred R. David
Prentice Hall
Ch 8-4
Implementing Strategies:
Low strategy implementation success:
–
–
–
–
Failing to segment markets appropriately
Paying too much for a new acquisition
Falling behind competition in R&D
Not recognizing benefit of computers in managing information
For Successful Strategy Implementation:
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–
–
–
Firms must market goods and services well
Firms must raise needed working capital
Firms produce technologically-sound goods
Firms must have sound information systems
Fred R. David
Prentice Hall
Ch 8-7
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
Fred R. David
Prentice Hall
Ch 8-17
Market Segmentation
Bases for Segmenting
Markets -–
Geographic
Demographic
Psychographic
Behavioral
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–
–
Geographic Basis:
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–
–
–
–
Demographic Basis:
•
Age
•
Family Size
•
Family Life Cycle
•
Income Occupation
•
Education
•
Religion
•
Race Nationality
Behavioral Basis:
–
–
–
–
–
–
–
Use occasion
Benefits sought
User status
Usage rate
Loyalty status
Readiness Stage
Attitude toward product
Region
County Size
City or SMSA size
Density
Climate
Psychographic Basis:
–
Social Class
–
Lifestyle
–
Personality
Fred R. David
Prentice Hall
Ch 8-18
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
Fred R. David
Prentice Hall
Ch 8-25
Product Positioning Map
High
Convenience
Rental Car Market
•
Firm 2
Firm 1
•
High
Customer
Loyalty
Strategy-Implementation
Tool—
•
•
•
•
Look for vacant niche
Avoid suboptimization
Don’t serve 2
segments with same
strategy
Don’t position in the
middle of the map
Low
Customer
Loyalty
Product Positioning based on:
•
Firm 3
–
–
Customers’ wants
Customers’ needs
Low
Convenience
Fred R. David
Prentice Hall
Ch 8-26
PP Map for Business Degrees

Schools:
SMC, CSUM,
CSUEB,
SJSU
High
Leadership
Training
Little
Individual
Attention
A lot of
Individual
Attention
Low
Leadership
Training
Fred R. David
Prentice Hall
Ch 8-27
Evaluating Worth of a Business
Central to strategy implementation as
integrative, intensive and diversification
strategies are often implement through
acquisitions of other firms.
Fred R. David
Prentice Hall
Ch 8-29
Evaluating Worth of a Business
3 Basic approaches:
1. What a firm owns
2. What a firm earns
3. What a firm will bring in the market
Fred R. David
Prentice Hall
Ch 8-30
WGO
Equity method
BS Equity
Goodwill
Valuation
2004
$201,875
$0
$201,875
2003
$210,626
$0
$210,626
2002
$179,815
$0
$179,815
Net Income
method
Net Inc
5
Valuation
2004
$70,641
$353,205
2003
$49,884
$249,420
2002
$54,671
$273,355
PE*Net Income
Share Price
EPS
Valuation
2004
$37.59
$2.03
$1,308,076
2003
$33.88
$1.33
$1,270,729
2002
$19.21
$1.34
$783,754
Market Value
Shares out
Share Price
•
•
•
•
Valuation:
What a firm owns
What a firm earns
What a firm will
bring in the market
•
http://finance.yahoo.com/
Valuation
2004
34,214
$37.59
$1,286,104
2003
36,974
$33.88
$1,252,679
2002
39,898
$19.21
$766,441
$32.92
Value Average
2004
$787,315
2003
$745,864
2002
$500,841
Fred R. David
Prentice Hall
Ch 8-31
Research & Development Issues
3 Major R&D approaches to implementing
strategies –
1. First firm to market new technological
products
2. Be an innovative imitator of successful
products
3. Low-cost producer of similar but less
expensive products
Fred R. David
Prentice Hall
Ch 8-34
Finance/Accounting Issues
Debt vs. Equity Decisions –
• EPS/EBIT analysis
– Earnings per share/Earnings before interest
and taxes
Fred R. David
Prentice Hall
Ch 8-42
Pro-Forma
6 Steps in Pro Forma Financial Analysis
1.
2.
3.
4.
5.
6.
Prepare income statement before balance sheet
(forecast sales)
Use percentage-of-sales method to project CGS and
expenses
Calculate projected net income
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
Fred R. David
Prentice Hall
Ch 8-44