IMPLEMENTING STRATEGIES: MARKETING,

FINANCE/ACCOUNTING, R&D, AND MIS ISSUES

Christa Auliffe Tubio Melanie Pinili

The Nature of Strategy Implementation

The greatest strategy is doomed if its implemented badly
-Bernard Reimann

Strategy implementation means change Less than 10% of strategies formulated are successfully implemented

The Nature of Strategy Implementation

Some of the reasons for the low success rate in Strategy Implementation:
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

Marketing Issues
Countless marketing variables affect the success or failure of Strategy Implementation (SI).
Two variables that are of central importance to Strategy Implementation:

Market Segmentation Product Positioning

Marketing Issues
Market segmentation
Subdividing of a market into distinct subsets of customers according to needs and buying habits.
A B C D E F

Marketing Issues
Geographic Region Country Size Age Gender Family size Nationality Density climate

Market Segment Basis

Demographi

Income Occupation Education

Family life cycle Religion race

c
Social class Personality

Psychograp hic

Behavioral

Use occasion Benefits sought User status

Usage rate Attitude toward product

Readiness stage Loyalty status

Marketing Issues
Market Segmentation is an important variable in strategy implementation for three major reasons:
It is required to successfully implement market development, product development, market penetration, and diversification strategies. It allows a firm to operate with limited resources because mass production, distribution, and advertising are not required. It enables small firms to compete successfully with large firms by maximizing per-unit profits and persegment sales

Marketing Issues

Market Segmentation directly affects the marketing mix variables: Product, Price, Promotion, Place

Marketing Mix component variables

PRODUCT PLACE PROMOTION PRICE

Quality Features and options Style Brand Name Packaging Product line Warranty Service level Other services

Distribution channels Distribution coverage Outlet location Sales territories Inventory levels and locations Transportatio n carriers

Advertising Personal selling Sales promotion publicity

Level Discounts and allowances Payment terms

Marketing Issues

Product Positioning Schematic representations that reflect how products/services compare to competitors on dimensions most important to success in industry

Marketing Issues
Product Positioning steps: 1. 2. 3. 4. 5. Select key criteria Diagram map Plot competitors products Look for niches Develop marketing plan

A product positioning map for menswear retail stores

Very latest, fashionable menswear Average specialty chain

Low Price Average mass merchandiser or discounter

High Price Average department store

Conservative, everyday menswear

Finance/Accounting issues
Central to strategy implementation

Concepts essential to strategy implementation Acquiring needed capital Developing projected financial statements Preparing financial budgets Evaluating a worth of a business

Finance/Accounting issues
Acquiring Needed Capital
Debt Equity

Finance/Accounting issues

Debt vs. Equity decisions

1.

EPS/EBIT analysis
An

Earnings Per Share/Earnings Before Interest and Taxes analysis is the most widely used method for determining whether debt, stock, or a combination of debt and stock is the best alternative for raising capital to implement strategies. This method involves an examination of the impact that debt versus stock financing has on earnings per share under various assumptions as to EBIT.

Finance/Accounting issues
Projected Annual Financial Statements
Allows an organization to examine the expected results of various actions and approaches.

Finance/Accounting issues
Steps in Preparing Projected Financial Statements
1.

2.

3. 4.

5.

6.

Prepare income statement before balance sheet (forecast sales) Use percentage of sales method to project CGS & expenses Calculate projected net income Subtract dividends to be paid from net income and add remaining to retained earnings Project balance sheet items beginning with retained earnings List comments (remarks) on projected statements

Projected Income Statement

Projected Balance Sheet

Finance/Accounting issues Financial budgets

It is a document that details how funds will be obtained and spent for a specified period of time.

Finance/Accounting issues
Types of Budgets
Cash budgets Operating budgets Sales budgets Profit budgets Factory budgets Capital budgets Expense budgets Divisional budgets Variable budgets Flexible budgets Fixed budgets

Finance/Accounting issues
Evaluating a worth of a business
Central to strategy implementation integrative, intensive and diversification strategies often implemented through acquisitions of firms

Three basic approaches 1. What a firm owns 2. What a firm earns 3. What a firm will bring in a market

Research & Development issues

Development of new products and improving old products to allow effective strategy implementation

Constraints
Level of support constrained by source of availability Technological improvements shorten product life cycle

Research & Development issues

Three major R&D approaches to implementing strategies:
1.

2.

3.

Be the first firm to market new technological products. Be an innovative imitator of successful products. Be a low-cost producer by mass-producing products similar to but less expensive than products recently introduced.

Management Information System issues

Information is the basis for understanding in a firm. Its one of the most important factors in differentiating successful and unsuccessful firms.

Functions of MIS:
Information collection, retrieval, and storage Keeping managers informed Coordination of activities among divisions Allow firm to reduce costs